Effective Ways That You Can Teach Toddlers About Money

The youth today are known by a rather interesting moniker: Generation Z. They are considered the Digital Natives. As this generation starts to grow up and evolve with the times, the importance of financial literacy has never been clearer. There's a need to combine financial knowledge that's tried and tested with solutions that are far more evolved.

How can a toddler around 3-6 years old learn about money?

The initial stage very much still involves the child's cognitive functions. They are starting to grasp the concept of counting. It is an excellent time to go about teaching them the basic idea of money. At this starting point, avoid concepts that are more abstract, like credit. Stay with tangible, physical things, like coins and paper money.

When children are trained to pay in cash, they will have an easier time connecting their budget to their spending. Coins are well-liked, if not absolutely loved, by kids because they feel much more realistic. Coins can be slid into piggy banks, which can bring about a feeling of play. Coins are also a great way for teaching the addition of values. A great place to start is having your child or children learn that 10 dimes are equivalent to a single dollar.

Teach the following non-negotiable essentials:

  • Earning
  • Giving
  • Saving
  • Spending

What's the best way to teach a toddler about earning?

A 4-year-old has no way of working a job in order to earn their own money. However, that doesn't mean they can't do simple chores and earn an allowance that way. They can't do big things like washing dishes or putting clothes in the washer yet, but they can do little things like putting their toys away and fixing their bed. Make it very clear that with each completed chore, they are earning their allowance. If their chores aren't completed by week's end, then they don't get paid. That's a lot like "no work, no pay" for adults.

What's the best way to teach a toddler about saving?

It won't take long for your child or children to realize that earning their own money doesn't equate to affording everything. The truth is, some things are far pricier, and some things will definitely not be available to them after just a week's worth of chores, or even two. This is a great way to introduce the concept of saving. 

When there's impatience because they really, really want something, then match a certain percentage of their savings, or have them do extra chores so that they can earn more. Whichever route is ultimately taken, do not raise their allowance suddenly or just buy the toy or whatnot for them.

What's the best way to teach a toddler about spending?

Money that's earned has a very different effect on children from money that's just given to them. They are far more mindful of their spending when it's the result of their work and patience. It's important that whenever they buy something, even if it's a small purchase like a lollipop or something bigger like a toy, they have full awareness that it is something they earned.


It is never too early for children to learn about money. Toddlers can start getting the concept as they grasp how to count. Teach them about earning, saving, and spending.

Looking into efficient money apps for kids? Download Kiddie Kredit, the mobile app designed to educate children on the credit system by completing chores!