7 ways to teach kids smart money habits

Helping children develop smart financial skills early can set them up for a lifetime of confident decision-making. Kids are naturally curious, and they often learn by watching the adults in their lives. By including them in age-appropriate conversations about money, you can give them tools they’ll use well into adulthood.

When children understand the value of saving, spending wisely, and planning, they’re better prepared to handle life’s financial responsibilities. So, these lessons can have a lasting impact, shaping not only their futures but also the way the next generation approaches money.

Let’s look at seven ways to start teaching kids about money. 

Kids often wonder where money comes from, how it works, and why it’s important. Use their questions as opportunities to teach. Keep explanations simple and relevant to their lives—for example, linking chores, allowances, or saving for something they want to buy to the bigger picture of earning and budgeting.

Share real-life examples from your own experience, such as how you saved for a vacation or a large purchase. This helps them see that saving takes patience and planning, but can lead to meaningful rewards.

One of the most valuable lessons is the difference between goals you can reach quickly and those that take more time. Short-term goals might be saving for a toy or a school trip, while long-term goals could be funding education or a first car.

Encourage kids to think about needs versus wants and show them how a simple budget can help cover both. If they earn money from chores or gifts, guide them in splitting it into categories for saving, spending, and giving. This builds a balanced approach to money from the start.

Experience is a powerful teacher. Give kids opportunities to handle money, make spending choices, and see the results. Let them compare prices when shopping, help with family budgeting for groceries, or track their savings toward a goal.

These activities teach the value of making thoughtful choices and resisting impulse buys. Over time, kids begin to understand that every dollar has a purpose—and that choosing wisely can help them reach bigger dreams.

Children pick up on attitudes and habits from the adults they trust. Show them positive money behaviors—whether that’s comparing prices before buying, setting aside savings regularly, or talking openly about how you make financial decisions.

Keep the conversation going as they grow. The topics will evolve—from basic saving and spending to more complex ideas like investing, planning, and managing risks—but the foundation you set early will guide them.

If your family works with a financial advisor, consider introducing your children. Meeting a trusted professional can help to normalize financial conversations and give them a resource they can turn to as they get older.

The more children see money as something they can understand and manage, the more confident they’ll feel taking charge of their own financial future. It’s also a great way to show kids what kinds of professions exist and that some people love to help others manage their money.

Instead of the classic piggy bank, consider opening an M&T Starter Savings Account for a child or grandchild under 18. It’s a hands-on way to help kids develop real money management skills, from making deposits to tracking balances.

Children can have full access or none, depending on how the account is titled. This flexibility lets you decide the level of independence they’re ready for, while still giving them the experience of managing their own money in a secure setting.

Take time to check in on your child’s savings and spending habits. Talk about what’s going well, where they might adjust, and what new goals they’d like to set. Celebrate milestones, like reaching a savings target or making a thoughtful purchase, to keep them motivated.

These regular conversations help reinforce good habits, give kids a sense of accomplishment, and show them that managing money is an ongoing, rewarding process.

For additional resources and interactive guides on a range of better banking topics, visit our Financial Education Center.