Practical Money Tips Your 5-Year-Old Will Understand

Apr 16, 2024 Family & Finances

Introduce simple financial concepts early on to help your child become more capable with money as they mature.

Mom and son in grocery store

Let’s face it, no one is going to master money at age five. However, introducing financial concepts early on can help children be more capable and comfortable with money later in life. Here are some easy tips you can teach your five-year-old about finances:

Simple To Understand Money Lessons

Things Cost Money

The best way to teach your child about money is through hands-on experience. For instance, the next time you buy ice cream, involve your child in the transaction by having them hand the cash to the cashier. This practical exercise demonstrates the significance of money and its role in everyday life.

Money Is Earned Through Work

Explain to your kids that adults go to work every day to pay for the stuff they own. When you go out, point out the people you see working and remind them that they’re doing it to earn money, which they use to buy the things they need and want.

Not Every Want Is A Need

Despite what they may think, not every one of your child’s wants is an emergency. Describe the difference between things like food and clothing and not-so-necessary items like candy and toys. Bonus benefit: when they start getting their own money, they’ll have an easier time managing it.

BONUS TIP: Different Coins Have Different Values

As a parent, you can help your child understand the value of coins by using everyday activities as teachable moments. When kids are about five years old, they’re old enough to learn the value of coins, even if they don’t yet grasp their buying power. Here are four activities to help introduce the value of coins:

1) Make it a game. Play “Exchange!”, a game in which players roll a die to determine how many pennies to take from the pot. Once a player has five pennies, they yell “exchange” and trade them for a nickel. Once the last nickel is taken, the person with the most nickels wins.

2) Set up a family store. Buy inexpensive prizes and set up a store. Price the items using various values, avoiding prices that require only one type of coin. Create a rewards system so your child can receive coins throughout the week. Schedule a “shopping” day when they can spend their coins at the family store.

3) Go to an actual store. As we mentioned in the tips above, the grocery store is an excellent place to engage your child. Ask them how many dimes, nickels, etc., you’ll need to buy specific items. Ask them to calculate the exact amount with each type of coin.

4) Pay to play. At the end of each day, take the coins out of your pocket and put them in front of your child. If they can count them accurately, they get to keep them. The coins can even be spent at the family store.


Early exposure to financial concepts can foster a healthy attitude towards money and instill good financial habits, such as saving regularly and spending wisely. So don’t wait and get started using the tips above.

Copyright BALANCE

Two young girls playing on a playground.
Life Guidance for:

Raising Money-Smart Kids

Talking to kids about money is not only acceptable but also encouraged. Use our tips to help your child understand and practice age-appropriate money management skills.

Related Articles

Banking on each other.
Building stronger communities.®