5 things to teach your kids about money before college 

6 mins readLast updated October 4, 2023by Charlie Barton

Developing a healthy relationship with money at an early age can help kids form good money management habits. Find out more.

Teach your kids good money habits today and they’ll be much more confident when it comes to managing their money as adults. But what good habits do your kids need to know, and how can you help them learn good practices? Here’s our guide to the essential money management skills your kids need to know before they turn 18.

Why teach your kids about money?

It’s a well-established fact that kids understand a lot more about their environment than it may seem — and this is no different when it comes to money.  

From an early age, kids will slowly but surely start to learn about money, including through some of the money discussions you may be having around the house. So, rather than letting your kids develop money habits through trial and error or through the wrong sources, it makes sense to help your kids gradually develop their understanding of money in a safe environment.  

And best of all, encouraging good money management can be a lot simpler than it seems. As your kids get older, you’ll get to teach them new things and build on skills they have already developed. 

1. Introduce your kids to money early on

By the time your kids are old enough to start understanding, the most important thing to do is simply to talk to them about money. Introduce them to the concept of money being used to buy and sell things, and that money is earned.  

Let your kids see you using money, too. Even if you’re using a credit card, explain that you’re using money to buy things. When you go to the grocery store, bring your kids with you and let them see you using money to pay for the things you need. 

If your kids are a little older and more confident with numbers, get them to hand over the money to the cashier, and to count any change. You could even let them compare grocery prices and figure out which of the same items is cheaper.

2. Use an allowance

The sooner your kids have an allowance of their own to take responsibility for, the sooner they can start developing their own confidence with money. How you decide to give out this allowance is up to you. You could choose to give your kids $1 or $2 a week, or you could give it to your kids once they have completed chores around the house. Whichever method you prefer, it’s time for your kids to start handling some money of their own.  

At the same time as introducing an allowance, it could be a good idea to give them a notebook or tracker where they can keep track of the money they are collecting. This will help them see their week-on-week or month-on-month progress. Most of all, remind them that the more they save, the more they will be able to afford as this introduces the importance of patience and delayed gratification. 

And in place of a piggy bank, why not use a clear, glass jar to store their money? This way they will be able to see their money pile growing, and this can be a good way to encourage them to save.

3. Help them understand the importance of smart decisions

Around the same time as your kids start learning to save their own money, it’s time to introduce the idea of opportunity cost: That decisions to do or not do something can have an impact on their money.  

This is particularly effective if you are giving your kids an allowance based on chores that they help with. Should they decide they don’t want to do certain chores, kids will discover that they have less money. Equally, though encouraging them to think about their money choices is advised, your kids should start to understand that the money they receive in one week or for the month is the only money they will receive. 

So should your kids go out and spend all of their monthly allowance, they will have to get used to the idea that it will be their only source of money for the duration. In future, they will need to use their money more effectively. Although your kids won’t need to learn to budget just yet, this will help them develop the skills needed. 

4. Help them to appreciate what they have

As your kids get older, they’re sure to start realizing that other kids’ parents have bought them things that they don’t have — particularly in the age of social media. This is a good opportunity for them to learn about gratification and appreciating what they have.  

There is always likely to be a latest and greatest toy or gadget, but encourage your kids to see the benefits of the items they already have. This will help them to understand the difference between impulse buying and buying based on a rough understanding of what they want and what they need.  

5. Digital bank accounts for kids

Eventually, your kids will need a bank account of their own. Almost all major banks offer accounts for kids that come with handy features that help them use their money wisely.  

Moreover, as more and more bank accounts become digital, there are apps available that can help you set limits and controls on what your kids can do with money. With the right safety net, your kids can start to visualize digital money and explore more ways they can use it without taking risks.

6. Saving for college

As your kids move through high school, it will soon be time to think about college and meeting the costs that come with it. With the costs of college growing all the time and student debt a lingering problem for many, the sooner your kids start saving for college, the more prepared they will be.  

Though your kids might not know if they want to go to college just yet, having a pool of savings they can dip into when they need it can still be a major asset, even if they don’t go. 

Here, digital apps can be a real saver too. Banking apps make it even easier for people to save, as many come with inbuilt pots that savers can allocate portions of their savings to each month, helping them visualize their progress toward their college goals. 

Teaching your kids about money can help them adopt the right habits in adult life. But there are always ways everyone can improve their money management skills. Speaking to a financial advisor can help you understand your money and make simple changes that make a difference. Find your next financial advisor today.  


Charlie Barton

Charlie Barton is a writer at Unbiased. He has been writing about personal finance and investing since 2017, with extensive knowledge of platforms and products. Charlie has a first-class degree from the London School of Economics.