When teaching children about money, it’s important to start from an early age. Here is an age-by-age guide for what you can teach and when. It is never too early!
Teaching Children To Save Money
Have you ever looked at your kids and wondered how you would one day teach them about money? Your child is never too big or too small to learn about finances, so actually, the time is now! Teaching children about money is an essential skill – just like reading and writing.
You should never be shy about teaching your child the basics of life and money is definitely one of them. They see you use cash at the store, watch you pay with credit cards, and watch packages arrive at the house.
They want (and need!) to know how all of that is happening sooner rather than later. Here are some tips for how and when to start teaching your child about finances.
Teaching Your Child About Money
Teaching Money Ages 0-2
Buy a piggy bank and teach your young child to put their coins into it. Each time your little guy or girl finds a coin, allow them to put it in their little bank.
Show them the different sizes and different colors of the coins, but make sure that you are supervising them at all times. At this age, children are still prone to learning about items by putting them in their mouths, so you don’t want that happening.
If you are uncomfortable with your young children using actual coins, consider starting with plastic money and a toy cash register. It is never too early to begin to teach the concept of money.
Buy A Coin Bank
When you first buy the coin bank, make it a big deal. Give them a cute piggy bank that you think your child will enjoy.
It can be a little pig or a coin box, but choose something that will appeal specifically to your child. Make sure that it has a large slot so that their tiny fingers can place a lot of coins inside and they don’t get frustrated with a smaller opening.
Show your child that it is so special that it has to be kept in a safe place. As a bonus, putting money into their savings bank is a great way to practice their fine motor skills.
- Gently introduce your little ones to the concept of money.
- Teach your child about different coins and the differences between them.
- Buy them a money storage container and allow them to put their real coins inside.
Teaching Money Ages 3-4
Now that your child knows that money is something of value and saved (you collect it), you can teach them more about what to do with it.
Begin Teaching Money Skills
This is the time when you can take $1 in coins out of the piggy bank and let them buy a small toy at the store. Explain that different things cost money.
Show them the price tag, the receipt, and any change they get from the transaction. Be sure to allow them to pay the cashier themselves!
Another of the most important things to teach at this age is how to give some money away. If it is the holiday season or you know of a store where they are collecting money in donation bins, explain this to your child.
Ask if they’d like to give a few pennies or a dime to help someone else while pointing out the value of coins in their bank. Be sure to explain that donating spare change is a way of being kind to others.
- Begin to explain the different coin values and focus on different sizes and coin identification. For example, half dollars are much larger than dimes.
- Show your child how to use real money in the real world.
- Teach them the differences between three money activities: saving money, using it to make purchases, and donating money.
Teaching Money Ages 5-6
At this age, your child can start doing small chores to earn money.
Give Hands-On Activities
Have them help load the dryer for 5 cents or help clear the table for 10 cents. Explain that little chores can help them earn money, just like your job pays you.
Begin the discussion about what you or your partner may do for your employer (or for yourself if you’re self-employed) and explain how putting forth effort in a job setting earns you money.
If these little chores have led to a new routine of allowance, be consistent by making a chart that gets completed (either voluntarily or assigned) and let them keep putting those coins in their own piggy bank.
Make sure that they lift the weight of it to feel the money they’ve collected or transfer everything to a decorated clear jar so that they can see it.
- Teach your young people how to earn money in real life.
- Develop daily or weekly routines where they see that their efforts yield results.
- Give them a basic understanding of what you do at your job and how your work earns you money.
Teaching Money Ages 7-8
At this point, your child is getting older and a little more mature about money. They may start getting money for Christmas, from the tooth fairy, and for birthday gifts. This is a great opportunity to teach them how to save that money for something they really want.
Start Teaching Money Management
No longer saving nickels and dimes, maybe your young children have expressed an interest in a certain kind of toy. Help them track their savings until they have enough money for the purchase.
Depending on how you want to play this and the cost of the item, you can teach your child to save for the item all on their own ($19.99 plus tax – which means you have to explain tax beforehand), save for the item itself and you pay the tax, or you can split the item’s cost half and half (if they save $10, you will contribute $10).
Either way, towards the later end of this age range, you will want to explain how sales tax works and why it is charged.
- Help to develop your child’s basic skills of saving money to the next level.
- Explore different ways of encouraging your child to save money for something specific.
Teaching Your Adolescent About Money
Teaching Money Ages 9-10
Help your child start their own business! You could have a little entrepreneur on your hands if you feed this part of their desire to learn about money.
They can start by cleaning cars, picking up trash, pulling weeds, and so on. Let your friends, family, and neighbors know that they are available for the service that your child wants to pursue.
Spend Money To Make Money
When they do their work, you can show them how you have to “spend money to make money.”
For example, the first time they have a lemonade stand, lend them the money to purchase the cups, the lemonade ingredients, and anything else they plan to sell (pre-packaged cookies?).
When they’ve earned some money, they need to pay you back first because you invested in their business.
When they run out of supplies, they can then use the money they’ve earned to purchase more. This cycle will help to show them the value of money and how investing in themselves would work.
Find A Fun Way To Save
At this age, you may want to consider getting your child a different money box than your classic piggy bank.
Something cool like a paper coin bank machine, a great piggy bank made out of organic glass, a mason jar, cute plastic bottles, or any other unique piggy banks you may find.
Older children will want something that doesn’t feel like they are still small children, so find something that will help them save money in a cool way.
- Teach the money management behind starting your own business with a simple activity like a lemonade stand or snow shoveling.
- Find a more age-appropriate savings container that your child will enjoy.
Teaching Money Ages 11-13
As your child gets older, they can start focusing on which items they’d like to spend their money on.
They might start incurring more expenses, such as buying their own pair of shoes or a new bike. They have had experience saving since ages 7-8, so this is very similar, just on a larger scale.
Create A Small Budget
A budget is a perfect tool for an 11-13-year-old. Write out how much money they are bringing in (from chores or jobs) and come up with a breakdown of how much should be spent, saved, and donated according to your values.
Make this very clear with a small, uncomplicated chart showing the different amounts clearly so that they are both aware of their finances and learning a skill.
- Support your child’s extra practice in saving for higher-value items.
- Teach them how to create a budget showing the money they have, the money they earn, and the money they intend to spend.
Teaching Your Teen About Money
Teaching Money Ages 14-15
It is time to get a summer job. If their entrepreneurship has taken off, keep supporting them and see if there are ways to expand. If they aren’t working to earn money, it is time to look around.
Get A Summer Job
There are lots of jobs to be had in the summer. Everything from gardening and lawn mowing for friends, family, and neighbors to dog-walking to working at ice cream shops that are only open during warmer months.
As they bring in money, which will be in larger quantities than ever before, it is time to start thinking about saving for larger items.
They may want a car one day or to move out on their own. These are items that may take years to save for, so the ideal time to start is now.
Get A Bank Account
This is the time to help them keep track of their savings. You have probably been doing it for them for a long time, but it is time to hand over the gauntlet.
Introduce them to the financial institutions that your family works with and open an account just for them (if you haven’t already). This may need to be under your name (since they are minors), but most banks have programs for young adults.
- Encourage your child to look for a job, supporting them with life skills such as searching online and filling out applications at brick-and-mortar stores.
- Discuss the best way to save for larger items.
- Open bank accounts for your children and consider whether they are ready for debit cards.
Teaching Money Ages 16-18
This is when teenagers start to get a taste of adulthood. During these years, there are many things you will want to touch upon:
- How to open a bank account and how to use checks.
- What a debit card is and how to use it responsibly.
- What online banking looks like and how to use your bank’s website for their account(s).
- What a loan is and what a responsible borrower looks like.
- What purchases someone uses a credit card for and how important it is to pay off the balance each month.
- The value of continuing to save their money.
- How to only use the money they have and not live above their means.
Financial literacy is an extremely important life skill that can’t just be reserved for adults, as we can learn money concepts from the very beginning.
Teaching children about money from a young age is important. It is never too late to start educating your child, so don’t let their age stop you.
There are certain principles that we should all know by the time we are eighteen and your children will ultimately thank you for the education and advice.