What Is the Best Way to Teach Children About Money?
If you have ever searched for the best way to teach your child about money, you have probably landed on a list. “Open a savings account. Give an allowance. Play Monopoly. Use a piggy bank.” The advice is everywhere, and most of it is not wrong. But it is incomplete.
Because here is what the research actually shows: the best way to teach children about money is not a single method. It is a combination of three approaches used consistently over time. And most parents are only doing one of them.
According to Dr. Ashley LeBaron-Black, a professor at Brigham Young University whose research focuses specifically on how parents teach children about money, kids learn more about money from their parents than from schools, media, peers, and work experience combined. Demme Learning That is a significant finding, and it carries an equally significant responsibility. What you do, what you say, and what you let your child experience with real money matters more than any curriculum, app, or game ever could.
This article breaks down what the research says actually works, why most well-meaning advice falls short, and what parents can do differently starting today.
Why Most Financial Advice for Parents Misses the Bigger Picture
Most content about teaching kids money focuses on tactics. Savings jars. Chore charts. Allowance schedules. These are tools, and tools can be very useful. But a hammer does not build a house on its own.
Research by Dr. David Allsop and colleagues published in the Journal of Family and Economic Issues concludes that parent-child interactions and relationships, along with the specific ways parents teach about money, directly predict children's future financial capabilities, well-being, and satisfaction in adulthood. Keywords Everywhere
Notice that finding does not say that the right app predicts those outcomes or the right allowance amount does. The quality and intentionality of the relationship between parent and child around money is what drives long-term results.
That reframe changes everything. It shifts the question from "what tool should I use?" to "how am I showing up around money with my child?"
The Three Research-Backed Methods That Actually Work
Modeling: What Your Child Sees You Do With Money Every Day
Research summarizing a decade of family financial socialization studies confirms that financial modeling — a parent's own financial example — is one of the most effective methods of teaching children about money, and that healthy financial modeling consistently correlates with positive financial outcomes including knowledge, behaviors, and capabilities in adulthood. City National Bank
In plain terms: your child is watching you. They are watching how you react when an unexpected bill arrives. They are watching whether you comparison shop or buy impulsively. They are watching whether money conversations in your home feel calm or charged with anxiety. Long before you sit down for a formal money conversation, your child has already absorbed a significant amount of their financial identity from observing yours.
This is not meant to create pressure. No parent handles money perfectly, and perfection is not the goal. What matters is awareness. When you make a deliberate financial decision, name it. When you choose the store brand, say why. When you decline a purchase because it does not fit the budget, explain that. Those small moments of narration turn passive observation into active learning.
Discussion: Why Talking About Money Openly Changes Everything
Research has found that emerging adults who engaged in regular parent-child financial discussions growing up demonstrate better financial knowledge, attitudes, and behaviors than those who did not. Parents who create space for children to ask questions and learn at an age-appropriate level are giving their children a measurable long-term advantage. Essential Credit Union
Most parents avoid money conversations for understandable reasons. They do not want to stress their children. They do not feel qualified. They worry that talking about financial problems will create anxiety rather than relieve it.
But the research pushes back on all three of those concerns.
Dr. LeBaron-Black addresses the stress concern directly: "If there's financial stress in the home, we find that kids are already picking up on that. It actually helps to alleviate stress to have a parent say, 'Here's what's going on, and here's what we're doing about it.'" Prisma
Children are perceptive. Silence does not protect them from financial reality. It just leaves them to interpret that reality on their own, without context, vocabulary, or guidance.
Hands-On Experience: The Method That Outperforms Everything Else
Dr. LeBaron-Black identifies hands-on experience as the most critical factor in building children's long-term financial capability: "Actual hands-on experience with money was tied so strongly to kids' future financial self-efficacy — to all kinds of financial outcomes we want them to have later in life." Prisma
Lectures do not teach financial responsibility. Watching does not teach it either. Practice does.
This means giving children real money to manage, not pretend money. It means letting them make real spending decisions, even ones that do not turn out well. It means allowing the natural consequence of a regrettable purchase to be the teacher, rather than stepping in with a warning that arrives too late to land.
A child who spends their entire allowance on something they quickly lose interest in and then cannot afford something they actually wanted has learned something no conversation could have taught them as effectively. That experience, followed by a supportive conversation, is the financial education most adults wish they had received.
What Parents Get Wrong When They Try to Teach Money
Turning Every Money Moment Into a Lecture
Dr. LeBaron-Black notes that many parents treat money education as a one-and-done conversation, believing they can teach their children everything they need to know in a single sitting. Prisma Other parents swing in the opposite direction, turning every purchase into a teachable moment complete with a full explanation of budget principles
Both approaches backfire. Children, like adults, tune out when they feel lectured. The most effective financial conversations are brief, specific, and tied to something the child is already interested in or experiencing. Keep it short. Keep it real. Let the moment do most of the work.
Shielding Children From the Reality of Financial Trade-offs
Many parents, with the best intentions, shield their children from any awareness of financial constraints. They say yes to everything they can manage. They avoid mentioning when money is tight. They worry that exposing children to financial reality will burden them.
What this actually produces is a child with no framework for making financial decisions independently. Children who grow up without ever hearing the word "no" in a financial context, or without understanding that money requires choices, often enter adulthood genuinely unprepared for the trade-offs that come with managing a real budget.
Age-appropriate honesty is not a burden. It is preparation.
Focusing Only on Saving and Ignoring the Earning Mindset
Most financial education for children focuses heavily on saving. Save your allowance. Put money in a jar. Do not spend everything. These are not bad lessons, but they are incomplete.
Children who only learn to save money often grow up with a scarcity mindset around money, a sense that money is something to be hoarded rather than something to be earned, managed, and put to work. Introducing the concept of earning, even in very simple forms, gives children a fundamentally different relationship with money. Money is not just something that appears and disappears. It is something that can be created through effort, skill, and value.
Three Approaches Most Parents Have Never Considered
Make Your Own Financial Decisions Visible
Most parents make financial decisions quietly, invisibly, and privately. But those invisible decisions are exactly the ones children need to see. The next time you choose one option over another for a financial reason, say it out loud. "I'm going with this one because it's a better value and we're trying to keep our grocery budget under a certain amount this month." That sentence takes ten seconds and teaches three financial concepts simultaneously.
Let Your Child Have Input on a Real Family Financial Decision
Dr. LeBaron-Black recommends creating family savings goals and giving children a genuine voice in the process: "We could cut $50 a month by canceling a couple of subscriptions or eating out one fewer time a month. Give kids options." Prisma When children participate in real decisions, even small ones, they are not just observing financial concepts. They are practicing them.
Use Mistakes as the Curriculum, Not a Detour From It
The instinct to protect children from financial mistakes is natural and understandable. But a child who spends unwisely, lends money to a friend and does not get it back, or saves toward something and then changes their mind has experienced something more valuable than any lesson plan. Resist the urge to rescue. Ask questions instead. "How did that feel? What would you do differently next time?" That conversation, after a real experience, is where the deepest learning happens.
Introduce the Language of Money Early and Often
Financial literacy is partly a knowledge problem, but it is also a language problem. Children who grow up hearing words like budget, interest, savings goal, trade-off, and value in casual conversation develop financial fluency the way children develop any language, through repeated, low-stakes exposure over time. You do not need to define these terms formally. You just need to use them naturally, in context, as part of how your family talks about everyday decisions.
Connect Money to Your Child's Own Goals, Not Yours
One of the most common reasons financial lessons do not stick is that they are connected to goals the parent cares about rather than goals the child cares about. A child who is saving toward something they genuinely want is motivated in a way that no abstract lesson about the importance of saving can replicate. Start with what they want. Build the financial habit around their goal. The lesson will follow naturally.
How to Start Today, Even If You Do Not Know Where to Begin
BYU researchers emphasize that there is no age too young to begin financial conversations, citing evidence that even toddlers can begin forming financial habits, attitudes, and values. They also note that a strong parent-child relationship is itself a prerequisite for financial conversations to happen naturally, as children are far more likely to ask financial questions of parents they feel close to. White Coat Investor
You do not need a structured program, a special account, or a formal lesson plan to start. You need three things: to let your child see you making real financial decisions, to talk about money the way you talk about anything else that matters, and to give your child small amounts of real money to practice managing themselves.
Start with one. Add the others over time. The consistency matters more than the complexity.
The Ripple Effect of Teaching Kids About Money Well
Research from BYU found that children who learn proper money management from their parents are not only more financially capable as adults — they also tend to have more fulfilling romantic relationships. The reason, researchers believe, is that the same intentionality and discipline that produces good financial habits also produces better relationship habits. Empower Teaching your child about money is not just a financial investment in their future. It is a broader investment in the kind of adult they become.
That is not a small thing. And it does not require perfection. It requires presence, honesty, and a willingness to make money a normal part of how your family talks about the world.
Mintshift exists to make that easier. Whether you are just starting these conversations or looking to go deeper, we are here to help you raise children who are not just financially informed, but financially capable.
Want more practical, research-backed guidance on raising money-smart kids? Join the Mintshift newsletter and get age-specific tips and resources delivered straight to your inbox. [Sign up here — it's free.]
Sources: Dr. Ashley LeBaron-Black, BYU, Talk is Cheap: Parent Financial Socialization and Emerging Adult Financial Well-Being, Family Relations, 2023 | Dr. Ashley LeBaron-Black, BYU, Practice Makes Perfect: Experiential Learning as a Method for Financial Socialization, Journal of Family Issues, 2019 | Dr. Ashley LeBaron-Black, BYU, Teaching Kids About Money Pays Off in Finances and Relationships, BYU News, 2022 | Dr. Ashley LeBaron-Black, BYU, Money Talks: Teaching Kids Financial Fluency, BYU Marriott Magazine, 2024 | Dr. David Allsop et al., When Parenting Pays Off: Influences of Parental Financial Socialization on Children's Outcomes in Emerging Adulthood, Journal of Family and Economic Issues, 2021 | LeBaron-Black, BYU, A Decade of Dollars: Family Finance Research Summarized, 2023 | BYU News, Parents Should Be More Intentional About Financial Conversations With Kids, 2020
Q & A:
What is the most effective way to teach children about money? Research from Brigham Young University identifies three methods that work together: modeling healthy financial behavior so children can observe it, having open and frequent discussions about money at an age-appropriate level, and providing hands-on experiences where children manage real money themselves. Of the three, hands-on experience has been found to have the strongest connection to long-term financial capability in adulthood.
At what age should parents start teaching children about money? There is no minimum age. BYU researchers note that even toddlers can begin forming basic financial habits, attitudes, and values. The approach changes by age, but the principle remains the same at every stage: make money visible, talk about it naturally, and give children age-appropriate opportunities to practice.
Does talking about money stress children out? Research suggests the opposite is true when handled calmly and at an age-appropriate level. Children are already perceptive to financial stress in the home, and a parent who names what is happening and explains what the family is doing about it actually reduces that stress rather than adding to it. Silence tends to leave children to draw their own conclusions, which are often more anxiety-producing than the reality.
What is financial socialization and why does it matter? Financial socialization is the process by which children learn about money through their family environment — including what they observe, what is discussed, and what they are allowed to experience firsthand. Decades of research show that the quality of financial socialization in the home is a stronger predictor of adult financial well-being than formal financial education received in school.
Why do lectures about money not work for kids? Lectures present information without context or motivation. Children retain financial concepts most effectively when they are connected to a real experience they have had or a goal they care about. Telling a child to save is far less effective than letting a child experience what happens when they spend everything and then cannot afford something they wanted. Experience creates the meaning; conversation reinforces it.
Is it okay if I am not great with money myself? Can I still teach my child? Absolutely. Research shows that parents do not need to be financial experts to be effective financial educators. What matters most is modeling intentional decision-making, being willing to talk openly about money, and creating opportunities for hands-on practice. Sharing your own financial learning process, including mistakes, models problem-solving and resilience, which are themselves valuable financial lessons.
How do I make money conversations feel natural instead of like a formal lesson? The most effective money conversations happen in the middle of real life, not in a dedicated sit-down session. Narrate your own financial decisions as you make them. Ask your child what they would do when a financial choice comes up. Respond to their questions about money without deflecting. Over time, small moments of honest, casual conversation build financial fluency far more effectively than scheduled lessons.
What does hands-on money experience look like for younger children? For young children, hands-on experience is as simple as giving them a small amount of real money to manage independently and allowing them to make their own choices with it, including choices that do not turn out well. Shopping together, counting out coins, saving toward a specific goal, and making simple purchase decisions are all forms of hands-on financial experience that build real skills over time.
Should I connect my child's allowance to chores? Research does not offer a definitive answer, and both approaches have documented benefits. A middle-ground approach suggested by researchers involves expecting some household contributions as part of being a family member, while paying for additional defined tasks. What matters most is not the structure but the consistency and the conversations that happen around the money.
What is the single most important thing a parent can do to raise a financially capable child? Be intentional. Research consistently shows that the difference between children who develop strong financial habits and those who do not is not income level, not access to financial tools, and not formal education. It is whether the adults in their lives made money a visible, discussable, and experiential part of growing up. You do not need to do everything right. You just need to show up with intention.
