Afford Anything podcast

Episode: How to Teach Kids About Money, with Dr. Stephen Day
Host: Paula Pant
Guest: Dr. Stephen Day (Director, Center for Economic Education, VCU; Author, Teach a Kid to Save)
Date: January 23, 2026

Episode Overview

This practical episode dives into how to teach financial literacy to kids using the concept of a “mini economy” at home. Host Paula Pant talks with Dr. Stephen Day, who shares how parents can help children develop smart money habits through hands-on, play-based systems that mirror real-world financial choices. Topics include developmental stages, intrinsic vs. extrinsic motivation, practical implementation, and family dynamics.

Key Discussion Points & Insights

1. What Is a Mini Economy? (02:01)

• Definition: A system where parents and kids have jobs and sometimes businesses; they use play money to buy and sell items/services from a household “store.”
• Purpose: To connect chores, saving, spending, and decision-making—embedding real practice in family routines.
• Quote:

  “A mini economy is a household system where both kids and parents have jobs and sometimes businesses and there’s play money and they buy and sell in the household store, which is just set up on your kitchen table.” – Stephen Day [02:01]

2. Why Set Up a Mini Economy? (02:32)

• Not as complex as it sounds: Kids naturally enjoy play; parents want chore routines. Mini economies bridge the two.
• Onramps and habits: Parents want to teach money but need a “how.” Early, low-stakes practice works best.
• Parental hesitation: Many adults wish their own parents had taught them more about money.

3. Developmental Stages: Starting Young (04:07)

• Stage 1: Early childhood (3 years and younger)—Focus on executive function through safe, nurturing parenting and play.
• Stage 2: Elementary years—Critical for habit and norm-setting; key time for money practice not just information.
• Stage 3: Middle/high school—Add more financial information, autonomy, and real-world applications.
• Quote:

  “Elementary grades are when kids develop habits and norms and routines. And if they don’t develop any habits and norms about money, then you can miss the boat.” – Stephen Day [05:48]

4. Practical How-To: Mini Economy in Action (08:41)

• Example with young children: Job assignments like “zookeeper” (feeding pets, picking up stuffed animals). Payments in play money or “Day Bucks.”
• Goods and Privileges: Kids can buy things like candy (goods) or extra screen time (privileges) with their earnings.
• Life lessons: Teaches trade-offs (“a little now” vs. “saving for later”) and includes options for charitable giving.
• Quote:

  “Do we choose something little now or wait for something better later? I mean that’s—we do that our whole lives, you know, and we really want to start them on those choices now.” – Stephen Day [09:57]

5. Intrinsic vs. Extrinsic Motivation (16:32)

• Chore compensation debate: Should all chores be paid? Dr. Day says it’s fine to pay for some, not all—kids can distinguish the categories.
• Family work: Basic upkeep = unpaid; special jobs or “businesses” = paid.
• Research: Intrinsic motivation isn’t demolished by reasonable extrinsic rewards; clarity is key.
• Quote:

  “All humans, even kids, can think in categories, which means that you can pay them for some jobs but not for other jobs. It’s really that simple.” – Stephen Day [17:58]

6. Practical Family Dynamics (22:14, 25:24)

• Structure: Set clear expectations and routines. Chaos and frustration often stem from unclear structure, not busy schedules.
• Job titles and fairness: Kids want to know "what" and "why." Family jobs build intrinsic and extrinsic motivation if done with intention.

7. Managing Job Variety & Progression (31:52, 33:13)

• Examples of jobs: Zookeeper, gardener, landscaper (e.g., mowing), librarian (picking up books, reading to siblings), kitchen worker, pool attendant.
• Progressive complexity: As kids grow, increase the challenge/skill level of their jobs.

8. Sibling Dynamics, Conflict & Only Child Adaptation (36:35, 43:46)

• Sibling equity: Family meetings help redistribute tasks and resolve tension ("Lucy needs a tougher job").
• Only child/fewer siblings: Create businesses, join forces with another family for playdates/mini economies, speed up introducing entrepreneurship.

9. Goal Setting, Aging Out, and Evolving Systems (38:25, 40:27)

• Kids' goals grow: Mini economy money can be convertible to real money (with an exchange rate, teaching currency conversion).
• Real-world application: As kids get older, encourage translating household habits to bank accounts, saving, giving, and investing.

10. Building Autonomy & Financial Confidence (47:32, 56:43)

• Why model money at all? Many families hide financial matters, but using play money creates a non-threatening entryway for discussion.
• Encouragement: Parents have already started the process by building executive function; the mini economy builds from that foundation.
• Quote:

  “Parenting is all about structure. You set structures and boundaries so that your kids can have freedom and autonomy in, so they can start to learn to grow.” – Stephen Day [56:59]

Notable Quotes & Memorable Moments

• On Habit vs. Information:

  “Kids don't need lectures about money. They need to put in their reps. They need to form habits. And that happens through repetition.” – Paula Pant [59:58]

• On Motivation and Clarity:

  “Paying kids for things doesn’t ruin motivation, but confusion does. Confusion ruins motivation.” – Paula Pant [61:07]

• On Autonomy and Trade-Offs:

  “When kids earn, spend and save their own money, they stop negotiating and start choosing.” – Paula Pant [62:34]

• On Value of Practice:

  “Kids need practice. You know, they don’t just need head knowledge when they’re in elementary grades... but they do absorb habits.” – Stephen Day [58:14]

Important Timestamps

• 00:00 — Introduction of theme and guest
• 02:01 — What is a mini economy?
• 04:07 — Three stages of childhood financial learning
• 08:41 — Implementing mini economies for young children
• 14:18 — Goods vs. privileges in the household store
• 16:32 — Should all chores be compensated?
• 22:14 — Challenges of busy family schedules and structure
• 25:24 — Job expectations and intrinsic motivation
• 31:52 — Examples of creative job titles
• 36:35 — Sibling conflict and family meetings
• 38:25 — Evolving kids’ goals as they grow
• 40:27 — Connecting mini economy money to real dollars
• 43:46 — Adapting to only-child families
• 47:32 — The purpose of modeling money (especially for parents with financial anxiety)
• 50:23 — Running the mini economy during busy weeks or the school year
• 52:19 — Transitioning to work outside the home; the importance of saving and investing
• 56:43 — Final advice: Encouragement and practical structure

Key Takeaways

1. Money Lessons Should Be Hands-On

   • Children's financial habits are best developed through practice, not lectures. Regular, low-stakes decision-making builds lifetime habits.
   • “Kids need to practice.” – Stephen Day [61:06]

2. Clarity Around Motivation Is Essential

   • Paying for chores is not inherently bad; confusion about expectations is. Distinguish between “family work,” “paid jobs,” and “service work.”
   • “You can pay them for some jobs but not for other jobs. It’s really that simple.” – Stephen Day [17:58]

3. Mini Economies Foster Autonomy & Reduce Power Struggles

   • By giving kids control over their own earnings and spending, they learn self-regulation, stop negotiating with parents, and make independent choices.
   • “When kids earn, spend and save their own money, they stop negotiating and start choosing.” – Paula Pant [62:34]

4. Adapt Mini Economies to Family Structure & Age

   • Use creative job titles and progressive responsibility; adapt for smaller families by encouraging businesses or joining with other families.

5. Build Strong Routines & Family Meetings

   • Structure reduces conflict and supports the healthy development of both money skills and family culture.

Further Resources

• Book: Teach a Kid to Save by Dr. Stephen Day
• Animated Compound Interest Calculator: EconEdLink
• Free Book “Escape”: affordanything.com/escape
• 52 Financial Tweaks Free Guide: affordanything.com/financialgoals

This episode is filled with encouragement, practical advice, and real-life stories to help any parent or caregiver empower kids with financial skills that last a lifetime.