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Money Lessons I Taught My 5 Year Old

By Contributing Author 15 Comments - The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited May 17, 2013.

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My son just turned 5 years old in July. He is a tall for his age, loves soccer and can’t wait for September to start school.  While he is growing up (he doesn’t want to be called a kid anymore but a boy!), I am doing my best to transmit to him as much financial knowledge as I can so he doesn’t have to learn his money lessons the hard way.

Today I thought I’d share the ways I teach my oldest son about money, and maybe when we’re done you can give me some additional tricks in the comments!  ;-)

Quick Navigation

  • Money Is Hard To Earn
  • Money Is Fun To Spend
  • Money Is Not Important, It’s What You Do With It
  • If You Make Money, You Should Give Some Of It Away
  • Thoughts On Kid’s Allowances

Money Is Hard To Earn

The very first thing I want my son to understand is that money doesn’t come without effort. As a young boy, he doesn’t see the “behind the scenes” time where I work to make money. He sees me leave in the morning, come home in the evening and he gets clothes, toys and does activities in the meantime… it is as simple as this: when someone in the house needs something, daddy is going to pay for it.

So first, I had to learn to say “no” in order to show him that money is not limitless.  We often say no to our 2 children. Not because we can’t afford it but because it is important stress that sometimes you need to make choices and not buy everything you want.

I also tell my son how important it is to go to work each day and that it takes a lot of money to pay for everything we have. I also plan on bringing him to work on a Friday so he understands what it is like to work in the office all day (even though he will only spend an hour or two at the office, I’m sure it will look like days of work to him).

Money Is Fun To Spend

I don’t like money just for having money’s sake – or accumulating money in my bank account. What I like about money is what I can do with it. Renting a vacation home for our family, going to soccer with my son or going to the zoo are things I do with my extra money.

When your family has a budget, spending money allocated to be spend is a lot of fun. I don’t want my son to be afraid of spending or thinking that he can’t afford to buy something. I would rather show him that once you have learned to manage your money properly, you can enjoy the things  it can bring.

Money Is Not Important, It’s What You Do With It

I want to show my son that while you have to work hard for your money, you can reward yourself.  Since money is a powerful tool, it is important to not fear or hate it. It is also important to not love money either.

I have a fun relationship with my money as I see it as a way to treat myself and spend quality time with my family. I try to show my son that money, when used properly, can be a lot of fun.

If You Make Money, You Should Give Some Of It Away

I am well aware that my 2 children are spoiled. They have great godfathers and godmothers and grandparents who love to buy them toys. I don’t have a problem having seeing a  playroom full of toys and seeing my children doing all kind of activities. However, it is very important to me that they understand that not everybody has the same fortune.

This is why, every Christmas, I ask them to pick 2 toys that we will wrap and give to charity. I also contribute to a children’s hospital. From time to time, they send me a letter with the testimony of a child who was sick and has gotten better. I read the letter to my children so they see that there are people that can’t go outside and play.

Thoughts On Kid’s Allowances

I am quickly approaching a time where I’ll need to figure out how much and how I will give my son as an allowance. I don’t want to give money to my son just for the sake of giving money. I want him to learn what money is and how to manage it. Anybody have experience with giving money to their kids, and how it should be done?

Tell us your thoughts on these money lessons.  What other lessons do you teach your kids or do you think it is important to stress?  Tell us your thoughts in the comments.

Want more reading on teaching children about money? Check out these posts:

  • How To Teach Young Children About Money
  • Training A Child About Money – Online

This post was written by Mike from Green Panda Treehouse. He is a financial planner and runs several finance blogs within his online company including The Financial Blogger and The Dividend Guy Blog.

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Last Edited: 17th May 2013 The content of biblemoneymatters.com is for general information purposes only and does not constitute professional advice. Visitors to biblemoneymatters.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.

This article is about: Children, Education

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We love to mix it up from time to time here at Bible Money Matters. Would you like to write for us as well? Please email us via the contact page with your article idea.

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  1. Jackie says

    I give my son an allowance twice a month, and I also have him earn extra money by doing a chore that no one wants to do. (However his allowance isn’t tied to chores — we all just have to do chores regardless “because we live here”.)

    Reply
  2. Linda says

    Great article! Dave Ramsey has a great program – Financial Peace Jr. It comes with everything you need to set up the program. It includes a saving and giving section. I highly recommend it! Dave also has some great books for kids on the subject of money!!!

    Linda

    Reply
  3. Peter Anderson says

    I like the idea of tying an allowance to work – in other words reinforcing the idea that you don’t get something for nothing – you have to work for it. Dave Ramsey in his Financial Peace University program talks about not giving an allowance to his kids, but instead giving them commissions for the work they do. He also talks about once you give them the commission the importance of reinforcing the ideas of saving and giving in addition to just spending. I think Craig’s post on the subject lays it out pretty well too.

    Reply
  4. Helen Gibson says

    Check out the book Raising Financially Fit Kids by Joline Godfrey for advice on allowance. I think you’ll like it.

    Reply
  5. Arthur says

    I agree, if you just give a kid money without having to do something for it, it teaches them nothing. In the real world, you get money when you work. That is what kids need to learn early. When they work for it they will value it more and learn to save some.

    Reply
  6. Mike says

    I really like the idea of paying for work too. That’s probably a system that is closer to the “real world” once you’re an adult.

    thx for the tip!

    Reply
  7. Rob G says

    We don’t spend money on frivolous things like branded fashionable items, unnecessary toys or candy. Every time they as for something they don’t need to take that as an opportunity to talk about NEEDs vs WANTs.

    Reply
  8. tony says

    I also agree that allowance shouldn’t be “free” – I think it should be more of a responsibility to manage expenses for certain items. If my daughter has to buy lunch at school with her allowance, she’ll think twice about buying fast food and just pack lunch. If she’s responsible for her own hair products, she’ll start to figure out if the $25 bottle is really better than then $1.99 one. This teaches them about budgeting and also about being savvy consumers.

    here’s some of the best advice I’ve seen in a while on money and kids:
    http://www.savvydaddy.com/content/moneyandkids

    Reply
  9. Michelle Traudt says

    Great post and great tips! We have a 7 year old and a 12 year old and we are trying to help them develop good spending and saving habits. My parents did not spend a lot of time teaching me about money. I’ve had to learn the hard way!

    Reply
  10. Jenna says

    When I started getting allowance it was also the time I started tithing. Granted I didn’t know it was called tithing, more just the act of making sure part of my money, that came from my parents, then went to helping those in need. Since I saw everyone doing it at the same time, it didn’t phase me as being weird. However, when I got older I learned that not all kids started tithing then. But chances are when I have kids, I’ll do the same thing.

    Reply
  11. Tara says

    I was about 14 or 15 when my parents started giving me an allowance instead of doling out money when I needed something. My parents sat my sister and I down and made us list out what we expected to spend in a year. We calculated how many pairs of jeans we would buy, how often we would buy lunch at school, how many times we would go to the movies, etc. And then we divided that up to an amount that we would receive semimonthly – on the 15th and the 30th. It was like receiving a small paycheck twice a month since Mom would put the money into our bank accounts when she went to the bank. I definitely learned more about tracking how much money I could spend by that system than I did from them doling out money.

    Reply
  12. Jason @ One Money Design says

    This post is great timing for me as my daughter is 5 1/2. I think she is starting to understand we don’t have an infinite amount of money to spend. :) There are a few things we’re trying to teach her right now. First, (and this is a tough one at her age) the money we have doesn’t belong to us. It belongs to God. I know one day this will make more sense, but I don’t think it’s too early to start.

    Next, we’re trying to teach her earning. Earning only comes with work and doing the job well. I love the Dave Ramsey idea of commissions as there are plenty of work related things around the house that just come with being a part of the family.

    After earning, we’re trying to slowly teach her how to manage money. This will soon come in the form of a Give, Save and Spend bank. Of course, there are plenty of lessons to learn across these three areas.

    Thanks again for this timely post and obviously a great bunch of comments here.

    Reply
  13. David/moneycrashers says

    Great lessons. I have a three year old, and have always wondered what is the “right” age to start teaching him about money.

    But I now realize that if the lessons are right, you can start any time.
    Money is a serious subject, but if you show children the fun side of it, they’re likely to have more respect for it.

    Reply
  14. Adrian @ PIN says

    Well it is important that my kids understand the value of money, that they don’t take it for granted. I will try to teach them this by making money or an allowance hard to come by. In this way I will try to install in them the thought process that “if I want to buy this, I will need to do xxxx hours of hard work to buy it.”

    Reply
  15. LEMomma says

    I feel like a small allowance for doing nothing is fine. There are many important lessons to learn about money in addition to the fact that you have to earn it. Earning money is an abstract concept better for older kids. Things kids can learn from a small allowance include how to store it, how to count it, how to spend it wisely, how to save it. For example if my 3 year old tears up her $1 bill she won’t have it anymore. If she looses it, she won’t have it anymore. If she buys something she won’t have the money anymore. These are simple, basic concepts about money that small kids can learn. I will teach them to earn money for large “wants” when they are old enough to do some really helpful chores like mowing and pet sitting. Each of my kids has a wallet and they get their age in $1 bills every week. Also important is my kids are young and often misbehave and I don’t want lessons about money to be tied to daily power struggles.

    Reply
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