4 Basic Money Concepts You Should Teach Your Preschooler

Knowing how to save, invest, and manage your money is an essential life skill that every person needs to learn, even at a young age. As a parent, the concept of money and financial literacy must first come from you. Otherwise, if you don’t teach your kids how to manage their money, somebody else will. That’s just a risk you don’t want to take, especially with your children. Here’s a couple of ways you can use to start your preschooler's financial education in an easy-to-understand manner.

1. Explain Where the Money Comes From

Whenever you’re teaching your kids about money, it’s important they know where the money comes from other than just their mom and dad’s wallet. This is where the concept of working and making a living comes in. You have to repeatedly demonstrate and demystify the relationship between work and money to your kids. Your child is already at that age where they wonder what “work” is and why they do what they do to make a living.

2. Set an Example

Money habits in children are formed at a very young age, particularly at around 4-7 years old. This is where they start to watch how you are with your expenses, even if they still have a vague understanding of it. Every time you pay for groceries, buy clothes or toys for them, or go out to eat dinner, your child is watching you and observing your spending habits, without you knowing. 

These situations are perfect learning opportunities for them, you must set a good example all the time. If you’re arguing with your partner about money, they’ll notice that too. Setting a healthy example for them is crucial, and they’ll be much more likely to follow it when they get older.

3. Teach the Importance of Giving, Saving, and Spending

Now you’ve already established what money is and where it comes from, it’s time for your child to know the three fundamental principles when it comes to money: giving, saving, and spending. Giving is perhaps the most important of the three as you’re teaching them to feel the impact of helping others at a young age, which is an invaluable concept. 

On the other hand, you should also encourage them to set aside some of their lunch allowance for savings and how to spend their money responsibly. It’s important to remind them that once their money is gone, it’s gone. Don’t scold them for making mistakes just yet, as this is an excellent time for them to make those mistakes under the safety of your guidance.

4. Use a Clear Jar to Save

The piggy bank, as funny as it sounds, is actually a great tool for teaching money management for kids. But to make it more effective, there needs to be a visual representation of their progress in saving money. Instead of a piggy bank, use clear jars so they can see just how much their money has grown. Talk through this with them and make a big deal about it whenever you see it’s growing!


As a parent, you want the best for your children, including helping them learn about the importance of money. Even if you’re not teaching your kids, they will learn lessons about money one way or another. These tips should help you guide them into making better money habits as they grow.

Kiddie Kredit is a mobile app designed to teach children and empower families with money management skills. The app is designed to educate children on the credit system by completing a series of chores, each with its own corresponding value when completed. Download Kiddie Kredit today and start your child’s financial education early.

John D Saunders

John D. Saunders is a Web Designer and Founder at 5Four Digital, CMO at Kiddie Kredit and an Automation Expert with a decade of experience building brands online. He's worked with clients including Audi, NAACP and Apps Without Code.