Teaching kids about money doesn’t have to be a difficult task if you simply build the process into your normal day-to-day activities. You can start the process with children as young as two years old. Here is an age-by-age guide to teaching money milestones to kids.
Ages 2 to 3:
- If you aren’t already, begin teaching your child basic addition. Also teach the names of coins through identification and matching games. Once your child learns the names of all the coins, have her separate the coins into different types. Check out ABCYa for some fun age-appropriate coin-counting and other educational games for your child.
- Purchase a pretend cash register and use coins to teach your kids about purchasing items with money. You can teach them how to “shop” for items in a pretend store you set up right in your home using grocery items from your pantry.
Ages 4 to 5:
- Start linking addition and subtracting problems to counting money.
- Explain to your children the difference between things they want and things they need, and that they sometimes have to wait before they can buy something they want.
- Teach your child that they need money to buy things. A practical tip is to make your child choose between two items at the store they strongly desire.
- Have your child assist with clipping coupons for the grocery store and explain how this practice saves your family money.
Ages 6 to 8:
- Introduce the concept of working for money by giving your children an allowance. A general rule of thumb is a dollar per year of age per week. There are varying opinions regarding tying chores to allowance. Also check out some of our past blogs regarding allowances.
- Take your children with you to the grocery store and teach them about price comparisons.
- Help your children open their first savings account and teach them the process for saving money in their account.
- Talk to your children about your career and what you like about your job. Ask them what type of work they’d like to do when they get older. This will teach them that people work to make money, and that they can work AND enjoy their job.
Ages 9 to 12:
- Spend some time with your children learning about the evolution of the U.S. currency.
- Hold an annual yard sale and allow your children to price and sell their own items. This will teach them about setting a value for their items, making decisions, and negotiating prices.
- Let your children sit with you while you pay the bills. As they watch, they will more clearly understand that adults have to work to earn money to pay their bills. They’ll also learn about the types of expenses it takes to run a household. As your child is able, teach him/her how to balance a checkbook.
- Have a thorough and honest discussion with your children about credit cards. Explain to them that credit cards are loans, not free money, and that if credit card bills aren’t paid in full within a month, they'll wrack up interest, paying more than they originally spent.
- Give your child a basic overview of how banks pay interest to people for saving their money. Check out our past blogs pertaining to teaching your children about compounding interest.
- If you are looking for a great program to help you teach the concept of interest, check out our Money Management Program Certification Program geared towards children ages 10+.
Ages 13 to 15:
- Model and teach wise purchasing decisions to your children. Also, teach them the difference between quality and quantity.
- Encourage your teen to get a part time job. It can be babysitting, mowing yards, or working retail or food services. Teens enjoy the power and freedom that comes with earning money and making spending decisions. Your teen will learn that hard work nets income, which in turn gives them a lot more options. Be sure you are monitoring your teen’s ability to manage school, activities and a job. While a paycheck is nice, a balanced life is essential to your child’s well-being. Read some of our past blogs for money-earning ideas for children and teens.
- Teach your teen how to budget the money they make through their allowance and/or part time job. Explain the necessity of saving, the value of donating to charity, and the importance of spending wisely.
- Assist your children in opening a checking account and teach them how to write checks, and manage/balance their accounts. This will teach your children how to keep an eye on the bigger financial picture.
- Spend time with your children learning how the stock market works, what it is and why people invest in it. You can also participate together in “virtual investing and real-world learning” via the stock market game.
- Teach the relevance of credit reporting to your children and how maintaining a good credit score can affect their financial futures. Check out our past blog to learn more about credit reporting and FICO scores.
- Discuss college financing options and have a plan (well before your child’s senior year of high school). Ensure your teen understands how student loans work, how they accrue interest, and when they have to be paid back. Learn more at http://www.finaid.org/loans. Also check out our blog, Tips for reducing college debt.
Teaching children the fundamentals about earning and saving money is essential for their future financial success. Follow these milestones and remember to keep your discussions age-appropriate. We’d love to hear your practical tips for teaching kids about earning and saving money. Send them to us via the comments section of our website.
FamilyMint has helped thousands of parents raise money-smart kids by teaching children about financial goal setting, and forming the types of financial habits and behaviors that will lead to financial success. We are dedicated to helping parents improve financial literacy through our fun, educational, intuitive, and award-winning online money management application.