You may think that your child is too young to learn about money and finances but the truth is the earlier you can teach them the better. When should you teach kids about money? I have put together an age-by-age guide to help you get the conversation started.
We want our kids to have a positive relationship with money and learn about financial responsibility. This will give them a much better appreciation for what they have. It will also help them grow into money savvy adults.
I wish our schools taught more personal finance and money management classes, but it is up to us as parents to give our kids as much information and real life experience as possible.
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When Should You Teach Kids about Money?
My daughter is five years old now and is capable of understanding wants versus needs. We have taught her that if she wants to have a certain toy or special item, she will have to save up for it.
Kids do great with visual learning so I highly recommend a piggy bank that is see through and has different compartments for saving, spending, and investing/sharing.
Being able to see their money grow will get them excited to save even more.
Let kids be little entrepreneurs to grow their savings by setting up a lemonade stand or selling baked goods. We let our daughter do special chores around the house to earn extra money.
Once they have reached their spending goal, you may want to consider opening a bank account for them to store the rest.
Call your bank and see if they offer a no-fee account for kids or if they will waive the minimum. See if you can make an appointment with someone that is good with kids so that they can see how opening a bank account works instead of doing it online.
Let your child see you use cash instead of debit or credit cards all of the time. When they learn that money is a finite item, they will better understand that you have to work for it and when it runs out, you will have to earn more.
Some great books to get and read together are:
- Lily Learns About Wants and Needs
- The Berenstain Bears’ Dollars and Sense
- Milton the Money Savvy Pup: Brings Home the Bacon
Teaching Middle Schoolers About Money
Be open and honest with your kids about money and your financial situation. If they are aware of how much you make and how much bills are, they will be more aware of their own wants and needs when it comes to asking for the latest tech gadget or newest style of shoes.
By learning that it is OK to talk about money and the stresses that it can bring, they will be able to cope with any money anxiety later in life.
Be honest about your job and exactly what it is you do to make money to take care of the family. Let them know if you love your job or if you are grateful to have it because it lets you provide for your family.
This is the time to start talking about giving back and donating to charity. Preteens are more able to see the difference charity makes in the lives of others. Have them choose a charity that they care about and set a goal for what they will be able to contribute for the year.
This is a good time to start talking about having a savings account set up for a big goal in mind, like a car. They may be a few years away from getting their licence but if they start saving for a car now, they will be able to afford a car (or a better one) when they are 16 or 17.
You can let them know that you will match whatever they save for the car if you are able.
What to Teach High Schoolers about Money
This is the perfect age for kids to start getting a job. Ideally this will be a summer job but if they want to work during the school year, keep it to under 15 hours a week. You don’t want it to affect their grades.
Not only will this give them a chance to earn a considerable amount of spending money, but it will give them real life experience dealing with taxes.
Talk to your child about opening up a Roth IRA. It is NEVER too early to start saving for retirement. They will be well ahead of their peers that start saving in their late 20’s or 30’s.
That interest will continue to grow over their lifetime. Even if it is just $50 a month, that will make a big impact in the long run. Plus, Roth IRAs will not be counted toward their assets for financial aid when they apply for college.
Teaching College Students About Money
Before your kids head off to college, you need to teach them about budgeting. Do a daily, weekly, and monthly budget so they can see exactly where there money is going and how to keep track of it. Keep in mind to budget for things that we didn’t have in college, like Uber rides.
Teach them not to talk to anyone on the phone about credit card offers or giving out their personal information to a random person who calls about them. They could be scammers.
This is a good time to teach them about credit cards and how to apply for one. Teach them that credit cards can be good and are a necessity for them to grow their credit score.
They need to learn to be responsible with them and to not buy anything that they can not fully pay off at the end of the month. Do not cosign on your child’s credit card, let them get one when they qualify on their own.
It is a good idea to sit down with them and go over the benefits each card offers to see which will be the best one for them to sign up for.
Be honest with your kids about money, even if you have made mistakes. They can learn from them! If you have been wondering when should you teach kids about money, I hope that this guide will give you a starting point.
There is a book just for parents called: Make Your Kid a Money Genius if you want to learn even more information.