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Financial Education for the Family: Kids 5 & Under

Think back on your own childhood experiences with money. Did your parents talk about money with you or did they refuse to utter the m-word? Worse, did they fight about money?

Your conversations about money might have affected how you talk to your kids about money. Check out a quick tutorial about how to talk to kids about money. We’ve divided it up by age range and also put a small section about how to talk to your spouse or partner about money as well.

These conversations will pave the way for your kids’ — and your own — excellent financial habits.

Financial Conversations to Have with Kids Under 5

You can start talking to kids about money as soon as they understand what it is! Try these conversation starters:

  • “We use money to buy things at the grocery store.”
  • “We go to the bank to save our money, and you can get a Smarties candy when we go.”
  • “We save our money in your savings account. When Grandma gives you money for your birthday, we put it in a savings account (or your college fund at UNest).”

Answer any questions your kids have after they respond to your conversation starter. The earlier you start teaching them about smart money management, the better. They listen to what you say — and repeat it — no matter how young they are!

Financial Conversations to Have with Kids 5 to 8

Kids at this age can understand that you have to earn money: “Mom and Dad go to work to earn money so that we can buy you groceries and clothes.”

You can also teach them the difference between needs and wants, how to use debit and credit cards and online banking, keep track of spending and saving, and the meaning of lending and borrowing.

  • You may also want to talk to kids about advertisements and how they try to target kids. Talk kids through how just because they see a product online or on TV doesn’t mean that the product is a good product.
  • Kids who get an allowance or earn money when they do chores or rake leaves for a neighbor, kids get a sense of how much they can earn related to the amount of work they do.
  • At this age, you can also start to introduce compounding. You can introduce this complicated concept by having your children put their own money in a clear jar and you can add money to show them how money grows when they invest it (and don’t spend it).

Kids at this age understand that they can spend their money and now’s the time to start developing healthy decisions. They may need help to determine how to save and how to spend (and to save up for things they really want).

  • A spending jar
  • A savings jar for long-term savings goals (like a bike or iPad)
  • A giving jar for charitable giving

Until now, children tend to learn about money by watching what you do with it. You can easily start to get kids more involved in money conversations at this age.


This material is for informational purposes only and should not be construed as financial, legal, or tax advice. You should consult your own financial, legal, and tax advisors before engaging in any transaction. Information, including hypothetical projections of finances, may not take into account taxes, commissions, or other factors which may significantly affect potential outcomes. This material should not be considered an offer or recommendation to buy or sell a security. While information and sources are believed to be accurate, UNest does not guarantee the accuracy or completeness of any information or source provided herein and is under no obligation to update this information.