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On Teaching Frugality to a Toddler

My toddlers never took to no very well. They were, however, more cooperative when I gave them a convincing and logical explanation for that no.

In early childhood, storytelling became a powerful tool for both raising my toddlers, and teaching them about more complicated things—including money. Specifically, spending, saving, and adopting a frugal mindset.

Frugality isn’t about just spending less, but about making smart spending decisions, and it’s learned best as early as possible.

Here are some basic ways to use storytelling for raising a frugal and money-conscious toddler.

1. Share a story about the life cycle of money.

Start with a simple story like, “Daddy goes to office to do his work. He works really hard and then brings money home. Mommy, Daddy and Sammy will take the money and go buy our food from the store. And yes, we can also use the money to sometimes get ice cream.”

Since I work from home, this is the story I shared with my little one as soon as Dad left for work everyday. It took about a week for Sammy to make the association: no office means no money, and no money means no food or fun.

2. Connect money to everyday life.

Have conversations throughout the day about why it’s important to switch off lights in the home and to save water. Tie it to something that’s important to Sammy, like watching a movie. “We should switch off the lights here because we don’t need it anymore and it costs money. Let’s turn it off, so we save our money and can have more fun when we go out.”

Try not to bring up too many physical things, like toys—that could backfire.

3.  Explain your reasons for borrowing instead of buying.

Have conversations with your little one on the way to places like the library or community center. “We have to give the books back to the library so the other kids can read them. We don’t have all the money or all the space to buy and store ALL these books, do we?   Plus, sharing books are more fun.”

4.  Make it exciting to choose homemade.

When you make gifts at home instead of buying them, tell your little one why it’s special. “Aunt Sarah will love it when she gets this gift because we made it especially for her. You worked so hard and put so much love into it—how exciting!”

5.  Talk often about things other than money.

Frugal choices often have other benefits, like spending time together, or caring for the earth. Remind your child about how much fun you had at the park the other day, about the joys of music and dance. Talk about how repurposing items instead of buying new means nature can stay clean and grow.

Incorporate these experiences into your everyday chats. Make a big deal out of these little daily things.

Teach your little one that your family doesn’t need a lot of money to be happy, and as early as possible.  You don’t have to talk about money all the time to teach a toddler about a frugal life.  Share how frugal choices result in a richer life.

by Maya

Reading Time:

2 minutes





  1. LaToya @ Christian Momma

    Great article with lots of good tips. I teach my son about tithing and saving. When he gets allowance we put 10% in the tithe jar, 10% in the savings jar, and then the rest in the piggy bank.

    I will definately be using some of your story ideas as well.

    LaToya @ Christian Momma´s last blog post…Post Baby Body Blues

    • Maya

      The savings jar idea is great – in addition to the piggy bank. I will have to start using that soon!

  2. Krista

    we do the same as LaToya – we have 3 jars and Josh knows exactly what each is for. the first time we took his tithe money to church he wanted a refund after the service was over… but that just showed us that he still needed awhile to grasp the concept. i like the story ideas also – kids learn so much from narratives.

    Krista´s last blog post…Book Review: The Moon Shines Down

  3. Tabitha (From Single to Married)

    What a great post!! When we were growing up, my parents tried really hard to teach us the importance of money and spending. I remember how they would have us set aside 10% of whatever we earned for tithing to our church. It was a little thing but it taught us a great principle, one that we continue to use today.

  4. Tracy

    Thank you for the great article! We have raised our four children this same way. We use storytelling for other events too. On our way to a nice dinner or to a relative’s home we would tell about what might happen there, how the evening will play out, what will be the expected behavior while we’re there. This helps children to know what to do and what will happen during a new experience. They have knowledge and they use that to guide their own behavior/choices.

  5. Julie Beck

    This is an amazing post…and a well timed one at that!

    I am so glad I found this blog through the 2009 bloggies!
    Your storytelling suggestion makes so much sense. I don’t have kids yet, but I am amazed at how many of my younger cousins have no concept of how money works and don’t appreciate how much they have.

  6. Nicole

    This is a great article. My little ones aren’t fully talking yet. (2 under 2) But I do try to use logic with my oldest as much as I can. The thing we’re learning now is more about material possessions and the idea of generosity. I want my kids (and me too) to learn that spending less is not just to save (like you said above) but also to give to those that have less. i started to talk a bit about this in a previous blog post. (

    anyway, i love your thoughts and will start employing them soon.

    Nicole´s last blog post…Everyday…Redeemed

  7. Barbara Swafford

    Hi Maya – What a fabulous post. I love the part where you said, “Teach your child about wonderful ways to have fun without spending money.”. When I was growing up, we spent a lot of time outdoors. It challenged our imaginations and thinking back, those were some of the best memories.

    Barbara Swafford´s last blog post…What Benefits Does Your Blog Provide?

  8. sarah

    LOVE IT. What great advice!! We will be covering this for family night this coming week. My kids have been struggling to understand the money thing……and understanding that just because we may have enough money for something…it doesn’t mean that we SHOULD spend our money on it. Thanks for the terrific article!

    sarah´s last blog post…Y.O.E.

  9. Lisa Byrne

    Hi Maya, I loved your article!
    After reading it this afternoon, I tried it out on my 2 yr old son. As he was having his snack I said,
    “Where’s Daddy right now?”
    “Right! And because he is at work, he comes home with money…then we can buy the food we are eating right now with that money. Isn’t that great?”
    “Yes! Thank you Daddy for working!”
    So, though the money part may have been lost on this little two year old– a message of generosity was taught through storytelling! Thank you for the inspiration!

    Lisa Byrne´s last blog post…Are you getting enough primary foods?

    • Maya

      Hi Lisa!

      Thank you for trying it out !
      I think your little one is really really smart actually – it is wonderful that he expressed gratitude for the food he is eating!!
      If you “show him the money” on your next trip to a grocery store he will make that money connection I think. You have a smart cookie there 🙂

      Maya´s last blog post…Preparing to Believe in Yourself: The Science of Ditchiness

  10. Melaniesd

    My son is 3 years old. We have always put any money he recieved as gifts into his piggy bank. We save the money from returning our recyclables into his piggy bank too. He has never spent his money before. This week we rolled up what was currently in his bank and he had near $30.00. He really wanted Gordon the Train to go with his wooden train set. I suggested that he could buy it from HIS money since he had been such a good saver and had been helping mommy by making his bed and feeding the doggies. He thought this was so special! Off we went to buy Gordon this morning. He told the clerk that he was buying the train with HIS money and that he makes his bed cause he’s a big boy! The clerk got a big kick out of it. It made my son feel so good about his train. We put what he had left back into his piggy bank so that he can save for another train later on.
    We have not started an allowance yet and probably won’t until he’s 5. At that time I’ll encourage him to save a certain amount for giving, saving & spending.

  11. Dara

    This is great! I’m a BIG fan of teaching kids to be frugal. I’m an admitted coupon-aholic and I laugh when the kids ask if they can get something at the store, and then answer themselves with, “Oh, darn, it’s not on sale.” I think it’s good for them to wait to buy something they really want–till the price comes down or until they’ve earned the money themselves. Often things they think they have to have aren’t so important if they have to part with their OWN money to get it.

    Dara´s last blog post…A Little Heat for January

  12. bfs ~ "Mimi"

    A great post!! I need to figure out how to send a link to my daughter? She’ll really appreciate this, too!! She’s in the midst of going green and is a SAHM.

    bfs ~ “Mimi”´s last blog post…Wordless Wednesday

  13. sarah

    we do the same thing around here and it does work amazingly well! but i do have to laugh when my 2 year old informs daddy that “daddy go work – make money so buy toys.”

    they get it.

  14. J.D. Meier

    I like the way you share your smarts through stories.

    Storytelling is powerful.

  15. Domesticgoddess

    Thanks for this great article!

    One important value that I try to instill in my kids is to appreciate the importance of not wasting resources and related to that – frugality (as in to be mindful of how we spend our money).

    In addition to the points mentioned here, I also talk to my 4yo and 2yo about the plights of less fortunate kids who may not have enough food, books, clothes and toys because their parents may not be able to afford them. They always want to know why these parents cannot afford more.. so we discuss where money comes from, and why we must help others and not waste what we have etc.. We talk about sharing our things with others who may not be as fortunate, of donating to charities etc..

    Now my kids stop talking about throwing away toys and books that they don’t like anymore and often talk about giving them away to other kids who may not have as much.

    Domesticgoddess´s last blog post…New Art School

  16. Shopping Golightly

    SHOP THRIFT STORES! There are so many lessons learned in thrift stores! I’m currently working with Denver Goodwill to use my daughters elementary school as a springboard to launch a new program of field trips to thrift stores.

    My girls love thrift because they can afford it! Children want spending power too! How sad it is that today a $5 allowance buys squat or junk that falls apart the day of purchase.

    CHILDREN WANT SPENDING POWER! Take them thrifting and they can buy sweaters, CD’s, purses, books, jeans, jewelry, scarves, shoes, dresses, etc and do this with THEIR OWN MONEY. The children are empowered. They don’t need help and often they don’t want it.

    Many years ago when oldest daughter was four, she received $5 from a grandmother and was so thrilled to have her own money to spend. Stupid me took her to a major discount retailer. (This was before I got smart and started thrifting.) Her shoulders slumped when she saw the prices and seeing your child’s shoulders slump is heartbreaking. Mine slumped too and my heart sank. It was a giant let down.

    Let’s teach our children how to spend as you go. Give them a healthy sense of purchasing power. If they always have to borrow from mom and dad then they’ll grow up borrowing.

    If grandparents must give them obscene amounts of money to buy a birthday gift, children will grow up spending obscene amounts of money.

    THIS IS ONE OF THE HARDEST PARTS OF PARENTING, your children are always watching and learning lessons you don’t think you’re teaching. Remember that when you go shopping or when you buy a $200 pair of jeans.

    Shopping Golightly & now Mommy Golightly

    Shopping Golightly´s last blog post…Children Want Spending Power Too!

  17. Mary

    I love your idea of using stories to teach small children! Sometimes the children can teach us too … we had planned to take our grandson to the toy store on a beautiful Saturday morning to get a new board game. “Oh grandma!” he replied “do we HAVE to go to the toy store? Can’t we stay here and play with the helicopter leaves?” He taught me to look at what we had been given right there – a gorgeous day with time to play outside instead of heading to the mall … and in his little mind, it had nothing to do with being frugal but everything to do with getting the one resource he has so little of … playing outside!!!

    Mary´s last blog post…A different idea for using your emergency fund …

  18. Trey Baird

    I like the cause and effect idea here. I want to raise my kids to question things, and figure out why something is, instead of taking anything at face value. This might be a good way to develop that habit early on!

    I think that you’re a creative person Maya. You seem to come up with a lot of original, common sense approaches to things.

  19. Nathalie Lussier

    I think we all do well with stories. It is a powerful to take ourselves out of our heads, and into a new world. Of course with stories it helps when there’s a moral of the story. 😉 This is such a perfect way to teach kids about the value of money.

    Great one Maya! 🙂

    Nathalie Lussier´s last blog post…55 Green Budget Tips to Show Nature You Love Her

  20. Cara

    This is wonderful– thank you. My oldest is 2.5 and I lead a pretty frugal lifestyle, but had no idea how to start to teach him our penny pinching principles. I’m excited to put these techniques to use!

    Cara´s last blog post…Have a heart: Repurposing for Valentine’s Day

  21. Lance

    Hi Maya,
    While my “little ones” aren’t so little anymore – they still relate to stories. And they also relate to outcomes. As in – we don’t need that toy, or that extra snack, or that bigger television – because if we buy those things, then we might not be able to go on a big vacation. This is an example that has worked really well – as we’ve decided that one of the things we want to give our children are experiences. And that comes through visiting and exploring places outside of our area we’re in. And they seem to get this. This idea that we ca forgo some of our ‘wants’ now for some of our real desires down the road.

    Lance´s last blog post…Sunday Thought For The Day

  22. jona

    nice blog! helpful tips…thanks!

    jona´s last blog post…Paying Post

  23. soultravelers3

    Excellent! I just tweeted a link to this as I think teaching what is important in life and how to live a good frugal life needs to start young!

    We are 3 years into an open ended world tour and use many of these things with our child. We thrive on living large on little and find an extraordinary simple, green, fulfilling & free world-traveling life with an emphasis on education, creativity, connection and family bonding costs much less than most realize.

    We travel the world on 25K a year total costs & have been to 4 continents & 29 countries so far. I want my child to know that traveling and connecting with others from around the world is easy today and costs little or nothing.

    Stories and books add so much to a child’s life and help impart ones values. Combining that with hands on, experiential learning like life as a field trip and the possibilities are endless for our global citizens of the 21st century!

    soultravelers3´s last blog post…Family Travel Photo-Spain

  24. Alik Levin |

    Hey, Maya!
    I am aspiring dad trying to rise my two daughters by values. While money is not in our values list it is important to explain them what money is all about.
    I loved your story a lot and “Share a story about the life-cycle of money” is my favorite. I am big fan of life-cycles of anything 😉
    Thanks for sharing.

    Alik Levin |´s last blog post…Program Yourself For Extremely Fast Performance

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