Teaching Kids (Ages 8-12) About Money: Key Concepts for Growing Financial Understanding

In our previous article, we discussed foundational money lessons for younger children. As kids grow, their cognitive skills and life experiences expand — making them ready to understand more complex money concepts.

Between the ages of 8 and 12, children begin to think more critically and can make more independent choices about money. Research suggests this is a critical period for reinforcing healthy habits and introducing more advanced topics. For example, a 2021 OECD report on financial literacy in youth notes that practical, age-appropriate money management skills gained during the pre-teen years significantly influence future financial resilience. Similar findings from the Jump$tart Coalition and FINRA’s Investor Education Foundation highlight that early, hands-on experience with budgeting, saving, and informed spending decisions creates a strong foundation for sound money management into adulthood.

For children between the ages of 8 and 12, it’s important to introduce them to the next level of money management. Below are the essential topics to focus on during this stage, building on earlier lessons and giving children the tools to manage money with growing independence.

1. Understanding and Earning Money

How Money is Earned

At this stage, children can grasp the different ways people earn money, such as through jobs, careers, and even entrepreneurial activities like starting a small business (e.g., a lemonade stand or dog walking service).

Different Forms of Money

At this point, they are well aware that money isn’t just physical (coins and bills) but also digital (such as debit cards, online banking, and digital wallets).

The Value of Work

• Chores and Jobs: Reinforce the connection between work and earning money by expanding their responsibilities at home or encouraging small jobs like babysitting or dog walking.

• Entrepreneurial Ideas: Encourage them to think creatively about earning money through simple entrepreneurial ventures, such as selling handmade crafts or offering services to neighbors.

  
  

2. Budgeting and Goal-Setting

Creating a Simple Budget

Help them create a basic budget by tracking income (allowance, gifts) and expenses (toys, snacks). This can be a fun and hands-on activity that shows them how to manage their money.

Allocating Money

Introduce the concept of allocating money into categories like needs vs. wants, savings, spending, and giving. This helps them understand the importance of managing their money in different ways.

Saving for Short-Term and Long-Term Goals

Teach the difference between saving for short-term goals (like a toy) and long-term goals (like saving for a bike). This will help them think ahead and plan for bigger expenses. This not only teaches planning but also encourages them to think about priorities and values when using money.

Interest and Growth

Explain how money can grow over time in a savings account through interest and emphasize the importance of saving early to see their money grow.

3. Spending Wisely and Smart Shopping

Making Smart Spending Decisions

Teach them to think critically about their purchases, comparing prices, and deciding whether something is a need or a want.

Delayed Gratification

Introduce the idea of waiting to save up for something of higher quality or greater value, helping them understand the benefits of delayed gratification.

Comparing Prices and Value

Teach them how to compare prices, read reviews, and understand value for money when shopping.

Coupons and Discounts

Introduce the idea of using coupons, discounts, and sales to make their money go further.

4. Banking, Credit, and Debt Basics

Understanding Banks and Credit Unions

Explain what banks and credit unions are, how they work, and the basic services they provide, like savings accounts, credit cards, mortgages and loans.

Opening a Savings Account

If appropriate, consider helping them open a savings account to learn firsthand about banking and managing money.

What is Credit?

Introduce the concept of credit, explaining that it’s money borrowed to buy something now, with the promise to pay it back later, with interest.

Debt Awareness

Teach them the importance of managing debt carefully. Explain that while borrowing can be useful, it must be done wisely. We recently added Credit and Debt books to our recommendations page. Check it out for a useful resource.

5. Broader Financial Awareness

Charitable Giving

Encourage them to set aside a portion of their money for charitable giving, teaching the importance of helping others and contributing to causes they care about.

Basic Economic Concepts

• Supply and Demand: Introduce simple economic concepts like supply and demand, and how they affect prices.

• Inflation: Begin explaining how prices can rise over time due to inflation and how this affects purchasing power.

Building Financial Confidence for the Future

These topics build on the basics learned in earlier years and provide children with a more comprehensive understanding of money management. By the time they reach their teenage years, they will be better prepared to make informed financial decisions and develop good money habits that will serve them throughout their lives.

Simple activities like these reinforce financial lessons. By teaching these foundational lessons early, you can help your child develop healthy money habits that will benefit them for a lifetime. Check out our full list of recommended financial literacy books and activities at Financial Kid Academy for more great resources.

The information in this article is intended for general informational purposes and reflects the authors' personal views and experiences. All content is copyright © 2025 Financial KID Academy. All rights reserved.

Sources:

• OECD (2021). OECD/INFE Report on Financial Literacy in Youth.

• Jump$tart Coalition for Personal Financial Literacy.

• Money Advice Service & University of Cambridge (2013). Habit Formation and Learning in Young Children.