7 Smart Ways to Teach Your Kids About Investing and Money Management

According to a recent Bankrate survey, the habits we learn during childhood often stay with us for life—and that includes financial habits too. The 2025 Financial Habits Survey found that Americans who received good financial education as children were much more likely to carry those habits into adulthood.

Unfortunately, the same survey revealed that 54% of Americans consider that they never got the proper financial education as kids.

“There’s nothing more important than teaching kids about money,” remarks CHFC Steve Azoury, owner of Azoury Financial in Troy, Michigan. “Schools don’t usually teach this, so it’s up to loved ones to step in and share these valuable lessons.”

To prepare your children for financial success, it’s helpful to teach them how money works—including saving, budgeting, credit cards, bank accounts, and even investing. Here are 7 practical ways to help your kids learn about finances and get a head start in life:

Teach Them the Habit of Saving

To invest, you first need money—and for most people, that starts with saving. For some, that means creating a budget; for others, it simply means putting away part of what they earn.

The question becomes important early on, finance consultant Lori Gross of Troy, Ohio, explained:

“Creating a basic budget with young kids—using something like the envelope system—can be a fun and effective method.”

For example, if your child earns money through chores, good grades, or positive behavior, you can put that money into separate envelopes. When it’s time to shop, they can use only what’s in their envelope—and when it’s gone, it’s gone.

This teaches discipline and the importance of living within one’s means, instead of relying on parents or relatives for extra spending. It also helps them learn to prioritize needs over wants, a crucial mindset for future investors.

Help Them Open a Savings Account

Working in a financial institution is definitely a win-win situation where kids not only earn through working but also learn how money rules.

“Teaching personal finance should begin at a young age with simple lessons,” says Azoury. “Start by encouraging them to deposit a portion of their birthday or holiday money into a high-yield savings account—and watch it grow.”

You can open a custodial savings account for your child at many banks, often without any fees. It’s also the perfect opportunity to teach them about interest: open a good high-yield savings account and show them how interest adds up each month.

Encourage Them to Start a Small Business

Running a small business can help children understand the value of money and bring them one step closer to understanding investments. This is especially helpful for older kids who can handle some responsibility.

Azoury suggests helping kids invest their savings into something useful, like buying a lawn mower to start a small lawn care service.

They can build a client list, provide the service, and earn money—all while learning how investments can lead to growth.

Even at a small scale, this connects the idea of work with money, savings, and smart decision-making.

Give the Gift of Stock

A powerful way to introduce kids to investing is by gifting them a share of stock.

You can do this by transferring stock you already own, or by opening a custodial brokerage account and purchasing a share for them.

A great way to spark interest is to choose a company they recognize and like—for example, a brand they use daily or admire. This helps connect the idea of investment to real-world businesses.

Many brokers and companies make it easy to gift stocks, or you can use traditional brokerage platforms as well.

Use Games to Teach About Investing

Before diving into real investing, games are a fantastic way to introduce these concepts.

Classic board games like Monopoly, Acquire, or Modern Art can teach kids about money management and basic investing in a fun, approachable way.

If you want a more modern approach, use stock market simulators and virtual trading games. These tools let kids practice buying and selling stocks with pretend money while tracking their progress.

Through these games, they’ll learn that smart investment choices matter—and they’ll become familiar with how buying and selling investments works.

Open a Custodial Investment Account

An account can be opened for your child using a custodial investment account by only investing a little bit of money and exerting.

They’ll be able to:

•          Track their cash and investment values

•          Watch dividend payments

•          Make simple investing decisions under your supervision

Some of the best brokerage firms have no annual fees or minimum account balances, making it easier to start. Also, if you choose a broker that allows fractional shares, you won’t need a lot of money to buy into big companies. You can literally start investing with just a few dollars.

Research a Stock or ETF Together

Begin by showing the child what to buy and why; they will quickly grasp the concept.

That might include:

•          Looking at stock charts

•          Reading basic news about the company

•          Understanding simple valuation metrics

This is more suitable for older kids, but even younger ones can participate in simplified ways.

This is also a great opportunity to introduce ETFs (exchange-traded funds)—which bundle many stocks into one and tend to be a solid long-term investment. ETFs are ideal for beginners since they don’t require deep individual stock research.

Summary

“Teaching kids about financial responsibility starts at home—and the earlier, the better,” says Lori Gross.

You don’t need to start big. Even small financial lessons can make a huge impact over time. Give your child a bit of financial responsibility now, and as they grow older, gradually introduce more complex topics.

By doing this, you’ll be giving them a solid foundation for a financially successful future.

— Visit bankrate.com for more.