It’s Never Too Early–or Too Late–to Teach Kids About Money

Financial literacy is just as important as any other subject that kids learn in school. Yet the basic principles of saving, budgeting, and investing are rarely on the curriculum. Here's how to teach kids good money habits at any age.

Lifelong financial literacy starts much earlier than you might think. According to experts, by the time kids are nine years old, their financial habits are already set. It’s never too soon to start modeling good budgeting and saving for the kids in your life. However, even older kids and teenagers headed to college can still benefit from learning about money.

You can help kids understand the value of money and shape them into financially responsible adults no matter their age.

Pre-Schoolers

Set Up a Family Savings Jar

Here’s an easy way to help everyone in your household get into the spirit of savings. Decide as a family on a savings goal. It could be something minor, like going out to the movies together, or a bigger goal like getting a pet or taking a trip. Place a large, see-through jar or bowl in a prominent place in your house and label it with your goal. Then encourage everyone to drop their spare change into it.

Because the container is clear, kids can see the level of coins rise over time. It’s a great way to teach them that even small steps can lead to achieving a big financial goal.

Family saving money together
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Let Them Make a Small Purchase

Let’s say that your child received a little money for the holidays. Kids this young might not understand the difference between a dollar bill and a twenty–and those green pieces of paper aren’t exactly fun to play with. However, you can help your children learn counting and the concept of purchasing power with this game.

If your child receives a five, ten, or twenty dollar bill, let them exchange it with you for play money. Set up a “store” with small toys and snacks and let them buy what they want using their fake dollars. A toy might cost five bucks, a book could cost three, and a healthy snack might be a dollar. While they practice spending money and making financial decisions–do they want five snacks or one toy?–you can put the real money in a savings account for them.

Elementary and Middle School Students

Set an Example About Impulse Buys

Kids learn about how the world works from the adults around them. If you toss impulsive purchases into your cart every time you go shopping, guess what your child will grow up to do. Impulse buys such as magazines, candy, and soda at the cash register are bad for your budget. Idly shopping on your phone or computer is even worse. Remember that your kids are always watching, and it’s your responsibility to set a good example.

Mother and daughter learning about money
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Create a Fair System for Chore Payment

Allowances are a controversial topic in parenting circles. Some families take a hard stance against them, while others view it as a kind of “universal basic income” for kids. Parents and guardians who fall somewhere in the middle might be raising the most financially responsible children.

Set up rates for household chores that are fair to both you and your kids. Paying them to load the dishwasher or mow the lawn will help prepare them for their first jobs. It will also help them understand the value of household chores as they grow into adulthood.

Practice at the Grocery Store

The grocery store is the best place to help younger kids learn about budgeting, price comparison, and commerce. Before heading out to the store, get your family involved in planning meals and making a shopping list. Look at store ads together and get in the habit of clipping coupons, too.

Once you arrive at the store, teach your junior shoppers to compare prices on name brands and store brands. Show them where to find the cost per ounce on the shelf label to see if they’re really getting a bargain. If your kids have their minds set on buying a treat, encourage them to use their allowance so they can decide whether it’s worth the money. Grocery stores are a classroom where your kids can learn about balanced budgets and diets in the same place.

Mother and child saving money together
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Let Them Choose a Way to Give Back

One of the most impactful lessons you can teach your children is the power of giving to others. Let your child choose a special cause that’s important to them. They might be passionate about raising money to help stray animals or underprivileged kids in other parts of the world. Or they could help buy school supplies or warm clothes for families in your own community.

Once they’ve chosen a charitable cause, set up a way for your child to help. It could be as simple as collecting spare change around the house or as involved as setting up a lemonade stand to raise money. While it’s important that children learn how to save and spend their money wisely, learning to give teaches compassion as well as financial literacy.

Teenagers

Encourage Them to Earn Their Own Money

It’s a time-honored right of passage to get your first job as a teenager. Often, these jobs aren’t very glamorous–but the money teens earn should be theirs to keep. Getting a job can help your teen understand responsibility and money management. It’s also usually a wake-up call about how the “real” world works.

Ideally, your teenager already has a strong foundation in financial literacy. However, if you haven’t talked about money or modeled good habits, your teenager might end up wasting their paycheck. That’s a lesson in its own way; once you spend it, that money is gone.

Discuss Long-Term Savings Goals

To encourage your teenager to manage money more thoughtfully, talk about long-term savings goals and big-ticket purchases they might like to make. The ultimate teenage wishlist item is a car, so explain how much they’ll have to save to make the dream a reality. If your teen wants to buy a new phone or a pair of expensive sneakers, help them set realistic savings goals so that they can have the satisfaction of buying it themselves.

Try not to get in the habit of letting teenagers borrow money from you for these purchases. Even though they’ll promise to pay you back, it sends the message that spending beyond their means and accruing debt isn’t a big deal.

Teenage boy confused by credit card
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Talk About Loans and Debt

“I promise I’ll pay you back!” is a phrase that can get teenagers into a lot of trouble. They’re reaching the age when they can legally get a credit card, so it’s vital that you talk about how consumer debt and credit scores can impact their future.

In addition to credit cards, many high school seniors will be filing student loan applications. Talk to them about borrowing the least amount of money possible and explain how student loan debt is a burden they’ll be carrying long after graduation. Discussing the extent to which you’ll be able to support them in school might be an uncomfortable conversation, but it’s better than avoiding “the talk” about money.

Open a Starter Bank Account

If you haven’t already helped your children open a bank account, now is the time to do so. Many banks offer joint accounts so that you can keep an eye on their spending–and help out if your kid gets into a financial bind. Talk to your bank about the best account options for your teenager. Most of them will require that you open a savings account in addition to a checking account.

All Ages

Be Happy With Less

Use it up. Wear it out. Make it do or do without. That’s a slogan from World War II when rationing and shortages meant that it wasn’t possible to run out to the store and buy whatever you wanted. Teaching your kids when not to spend money is an essential part of financial literacy.

There are countless ways you can live a more frugal lifestyle. Cook at home and save dining out for special occasions. Repair broken toys instead of tossing them in the trash. Don’t compare your family’s financial status to other people or complain about not having a newer car or a bigger house. You can even talk to your kids about food waste or how much clothing ends up in landfills.

Developing a healthier relationship with money will be good for your entire family. Not only will you spend and save more mindfully, but you’ll probably find that your household budget is a lot easier to manage.

Lead By Example

Child saving money in three different jars
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All of these tips assume that you are able to model good financial habits. But what if you aren’t so great with money? The good news is that you can learn alongside your children. Get into the habit of budgeting with the whole family and practice more mindful spending. Make saving a family tradition and get involved with organizations that give back to your community.

Just as it’s never too late to teach your kids about money… it’s never too late for parents to learn, too.

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