Child DevelopmentParenting Tips

10 tips for Money Management : Helping kids achieve Financial Literacy

Time to introduce Money management in Kids/ Savings!

When I was small I often heard her say “ SAVE TODAY FOR PROSPEROUS TOMORROW”. Its now that I fully understand the reasons & practical implications of Money Management which made us save as little as Re1/-. It was an exciting journey as a child when we had multiple Piggy jars assigned for: Toys; Buying Gifts; Education; Sports. I still remember how every year mom used to redefine goals and re-allocate money. How she used to give small loans to her friends in return of some favour or charge interest. Purpose of charging interest was not commercial but just to ensure that they return the hard earned money.

And so now comes the same challenge in my life to inculcate the habit of “Savings” in my kid. Although its very early to begin, but I believe the earlier the financial literacy, the better it goes down the line. At this age (2-2.5years) kids can be easily moulded the way we want.

Money management in kids
Clock is ticking…Time to Save

Money management for Kids :

I just thought of many ways to start (only one/2 can be applied right now ,for he is just 2.5years) & so it came out in the form of a “Money Management post”.

This learning cannot be definitely in a serious mode, it has to be fun & practical way of learning. 

Read on to developing Resilience in Kids.

Sharing 10 money management tips for kids, i.e introducing kids to “Financial Literacy”:

1. Initiate at the right age & grow with time:

Well that’s a very big question, when to start educating kids of Money Management? Even some months back, I used to ponder on this question, but I really found that there is no age limit. By 2years, kids understand that we ought to pay “money” to buy anything we wish to. And yes, that is the beginning.

“My kid used to say, “Mumma give me Rs10, I wanna buy a choco’s packet”. He didn’t knew what all denomination of Rs10/20 meant per say cost of items, but he knew that I need to ask money from Mom/dad to buy what I wish. That was the beginning, when I knew I had to lay the trap;). Yes, I started saying him that he can ask for money only once a day & only one thing out of 10 wishes will be granted a day. The results were great, it was the start of saving. And, he started wanting for only one thing a day & that too in a calculative manner”. He used to think “what he wanted amongst the panorama of his most desirable items & opted for one, a day.  So I believe, the early you start, the better the concept sharing & its application:)

2. Situational tasks to decide & save:

Let them grow a lil big & give them fixed amount (little less than what you think could be the actual expense). For the sake of example, let them buy you some grocery/house requisites with that bunch of money. They’ll feel confused if the money stands short but then they will have to decide on the most important one. That way, they will for sure learn to manage money in such situations & be decisive. Don’t expect your kid to leave “his favourite” when he drops out of money;). So better let him know what all is a must to bring for you. Make them “Money managers” and ask them to manage the finances & choices.

3. Enjoy & promote small savings:

Let their friend’s birthdays be interesting & creative. Why find an Archies or Hallmark gallery nearby? You need to spare some time to sit with your child & help him make a card or gift out of his own creativity. Self made things are too emotional & it creates a sense of “Love” & “belongingness” in a  child. So why not replace expense by Love + Creativity.

4. Money games for kids:

Wow, I loved them & even now if I get some time out of my schedule, I’ll sit & play Monopoly. Once in the ages of 6+, get your kids business games as Monopoly, to learn “Money management” in a perfect fun way. Do narrate & link the game with real life experiences to make it easier for them to relate. Learning in a fun & practical way goes well beyond the theoretical one.

5. Piggy bank:

A practise I’m sure every mum would be doing for their kids. But don’t just keep one piggy bank, rather separate it for different purpose. As in one for “Buying Toys”; “New Dress”; Cakes & bakes; Ice creams & Snacks”. Let child start saving a penny basis his choices. Let him decide where to add money & after some months why not buy him an ice cream from his ice cream jar? If that’s empty, he’ll have to start saving in that jar to get another one:). It’s actually a great idea to help kids develop their likings. Also set a limit for every piggy bank, so that you don’t come to terms later on that only “Ice cream bank” has money & rest all are empty;). Kids are smart, you ought to be smarter Moms & dads!

piggy jars
Piggy jars

6. Show them Savings grow:

With investing every penny in their piggy bank, show them daily how Re1/- is being accumulated to Rs10/-. Start telling them the worth of Rs10 vis a vis Re1. This will bring the facts on the table that more the money saved, something big & better can be bought from it. Promote them to make it big before spending! You can also cite your example of how saving every 500/- over years made you purchase a Car, which your kid loves to roam in! This will get him to terms that big & beloved things don’t come that fast and easy. You ought to work, save & wait to get it. With this they’ll show more perseverance to own the thing they want with time!

7. Make them a part of financial discussions:

Once a child reaches his maturity level, try making them part of your financial discussions. Don’t think of it as an adversity if your kid gets to know of the financial condition. If you’ve bought a house, drag your kid in learning the hard earned money which went into. That will make him more mature & he’ll get into the terms of when to curb spending unnecessarily. They will learn the importance of saving money by looking at practical situations.

8. Invest their savings:

Once the child gains enough understanding of finances, start investing their savings in a form of “Child account” or similar schemes running in your country. Explain him the nuances of investing. How money will grow with time, when can the principal amount mature & what can be the things this amount can be used for. As in, it can be used for pursuing high education dreams of your kid; or getting enrolled into some sports academy or anything they love.This way, kids will promote saving & investing every penny right from the early years. It is a great approach to money management for kids.

9. Fix Budgets:

While kids are small, their demands are big, rather huge! They want everything from a small car to a their latest “Outlast Trinity” every month. A “No” every time will make your child pessimistic. Rather fix budgets from a very tender age. Let your kid know his monthly budget to spend & allow him to decide what he wants from that amount. Multiple small things or one big thing. Make your kid aware of the things which can be available in that budget & then help him tap on the most desirable one:). This way money management will be a happy note for the entire family!

10. Get them surprise from savings:

Finally, even we love surprises so why not for kids. Even if they are following 70-80% of the “Money saving advice”, encourage them with some surprises, although not daily. Let it be very random, so that kids don’t get into the trap of set expectations. Undeliverable’s then can cause an unhealthy attitude in them. You can also give them surprise, not in the form of some gift but by adding some extra penny in their piggy bank. This way they’ll be more excited to save.

So why wait? Start the “Money management for your kid” right now!I believe, you’ve got tons of ideas in the form of “Age ladders” to opt from!

Share down some of your creative ideas as well in the comment section below. Some really creative ones will be added in the post:)


  1. akyn30

    My Mama bought me a piggy jar when I was little so I can save something out from my school allowance. I will do the same practice to my son too. Thanks for the detailed discussion about teaching kids to be financially responsible .

  2. maria criselda maquiling

    Omg! This is like the best thing i have ever read on a parenting blog. I have been racking my brain for ages on how to make my son money literate because i have seen a lot of well educated adults fall into debts. I have the gift of poverty growing up so i avoided the pitfalls of debt because i have a direct experience of the consequence of being poor. But how do you teach children who are born into a better life on how to save? This is a very great read and will be applying the labelled money jars and progress from there afterwards

  3. Amber

    I need to start doing this with my kids! My son is really good about saving his money, but my daughter is terrible with it.

  4. Akamatra

    I agree on beggining early on the education. My daughter is 11 months old but as soon as she starts talking and understanding more I will begin to guide her

  5. Nicole McClean

    My girls have a piggy bank and I of course sort their bank account out paying in deposits monthly. I was also brought up this way with learning Money doesn’t grow on trees so I think it’s important topic!

  6. elenasts

    I totally agree. It’s very important to teach our kids how to save up on money from a young age. When I was born my grandmother opened a savings account on my name and deposited some money. 18 years later I got a nice little amount thanks to the interest grow.

  7. carol

    Love this article. My dad was a banker so we were taught at a young age to save money. So glad we had those lessons to fall back on — thanks for inspiring others to do the same!

    1. Jhilmil

      Thanks carol! I think the world needs to work on this early so that kids become strong when finances bite them! It pains to see when they hamper relations as well.

  8. Shannon M

    Such an important topic for parents to start thinking about early in life! Not only will it help your kids but knowing they are watching you just might make you a better manager of your own money!

  9. noonetocompare

    Piggy banks are are a great way to introduce the notion of saving money to children. My daughter loves the sound her coins make when she drops them in her bank. I’m slowly introducing her to simple concepts also. these are very useful tips!

  10. toastycritic

    I think teaching kids to budget here is a great thing. I was never taught to do it properly and definitely my ex wasn’t. Knowing how to and practicing would have made for less financial hardship when the time came.

  11. Anosa

    I think if we start early, show the importance of saving and how easily saving can be done I think that gives kids a higher chance to be responsible with their money when grown up

    1. Jhilmil

      That’s true & this is what I feel with myself! Life is not always a bed of roses & we all have to be financially prepared for it! Thanks for the read

  12. CourtneyLynne

    Great tips!!! My daughter is getting to the age where I need to teach her about money. Life is expensive and she needs to learn that

  13. meximoments

    These are great tips! My daughter is starting to make a little money from babysitting and she is doing well at saving most of it! I’ll have to share these with her!

  14. treesworldblog

    great post! Love your tips, I agree it is important for parents to teach their kids how to manage their money while they are young.Money saving and management is a great principle that children need to learn early, so as they get older they will know how to manage ,save and spend their money.

  15. vishalgmr1971

    These are good tips and tricks to make kids save. My younger one (16 years old now) still gets a lot of money from me because he saves a lot. Every parent needs to read this article so that they can teach their young kids benefits and value of saving at an early age.

  16. Anna

    Interesting topic. As a new Mom (my son is only 20 months old) I did not even think about it yet, but honestly it’s a very important thing. In todays consuming based society it’s very important that kids understand the concept and importance of money and managing it just right, or else they will be lost in the world of debts.

  17. Sarah

    I love the idea of multiple piggy banks. I have four children and they share one large one at the moment when it is full. (which takes forever as it is huge), we open it and we divide it into 4 equal amounts. They then have to bank at least half of the money and they can spend the rest on whatever they are aiming for. I might have to invest in a few more.

  18. Rachel

    I was hugely encouraged to save when I was little, and very rarely spent the money I was given. i loved my piggy bank 🙂 My parents didn’t’ really give in to buying us stuff all the time – we’d get the odd magazine but other than that were encouraged to enjoy what we already had. I think due to this I spend carefully now. I never had pocket money but didn’t really feel like I missed out hugely.

  19. Sharon Koenig

    These are all fantastic tips! I totally agree that the earlier you start, the better. One of the most important things you can teach little ones, too, is how much of a difference some small but regularly done savings can make in their savings account. $5 a month from their allowance adds up, so does a percentage of each paycheck they get with their first job, and so on.

  20. Eloise

    My grandmother taught be about finances when I was about 7 yrs old, she would have me help her balance her checkbook! (oh the memories!) I teach my kids about it too! it’s important to instill good budgeting habits while their young! great tips!

  21. Sarmistha Goswami

    Including kids in financial decisions is really important and most parents fail to do that. As a kid I exactly knew how the financial situation of our household i sand I am glad my parents thought me the importance of saving at a very early stage of my life. I thank them till today 🙂
    Thanks for sharing.
    Do drop by my blog as well : http://styleovercoffee.com 🙂

  22. Claire

    Oh wow these are some great tips, I didn’t even think about. I am here trying to save money, so I think it’s definitely great to show and teach kids to save money.

  23. MinhNguyen

    This is a great share. I’m getting ready to have children and all family members are waiting. I have given some methods to be able to apply the teaching. I never paid attention to managing money for children. I will share this with my husband.

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