Main image courtesy of Helping Families Thrive.

One of the best things you can instill in your children is a good dose of financial literacy. Although some people may think that children don’t need to know, or don’t want to learn, about money, the opposite is actually true. Children learn by seeing what their parents do, and can develop their relationship to money based largely on the actions of their parents.

If you want your child to grow up with a healthy understanding of money, you should be the one to impart these lessons from a young age. We all want what’s best for our kids, which is why it’s important to lay a solid framework of how money works so they can see first hand how to properly manage it. 

While some kids may have an abstract knowledge of money, as a parent, there are things you can do at any age to ensure your children grow up with the basics when it comes to managing money.

In this article we’re going to discuss:

• Why it’s important to ensure your kids get good money advice
• Tips to help teach your kids money basics at any age

Why it’s important to discuss money with kids

Even if they’re young, kids can benefit from money discussions

Many parents avoid having the money discussion around their children because they feel it’s either inappropriate or that kids shouldn’t be burdened with thoughts of money just yet. Adults may also avoid it because they think that they’re not financially savvy enough to impart the right kind of advice. While you may not want kids to worry about money, you’ll at least want to make sure they hear the right kind of information from you. Otherwise, they’re going to learn it somewhere else! 

Keep in mind when you talk to kids about money, it doesn’t have to be scary or negative, even if your family’s financial situation can be strained at times. You can always choose to talk about money positives, such as how the family saved using coupons, or what you did to resist an impulse buy. Making money talk a normal part of everyday conversation can go a long way to avoiding the idea that money is taboo and not to be discussed.

Everyday moments are a great chance to bring up money to your children, after all, it does affect almost everything we do and many of the decisions we make on a daily basis. Let your kids see you paying with cash, or let them see you decide not to buy something you really don’t need!

In addition to deciding what to spend money on, when kids see you putting money away to save, it’s another way to show them how important saving money is. They’ll see you spending money, but it’s also important for them to learn that saving money is also something you do regularly.

Including kids in financial discussions that impact the family is a great way to get them interested in and learning about money in a healthy way. There are plenty of books, games, and apps out there that can help clarify what you’ve been teaching them as well.

Tips to teach your kids money basics

Practical money advice for kids of all ages

While we recommend starting to talk to your kids about money at a young age, you know your children best and will know when the time is right. Ideally you’ll want to start with money basics before age seven, as research shows habits have already formed by then. The sooner you start, the greater the chance they’ll be financially capable later in life. But what are some of the ways you can reach kids of different ages?

Preschool and kindergarten

This is the age when most kids receive their first piggy bank that shows them the importance of saving their pennies, dimes, nickels, and quarters. Another idea is to use two jars, one for spending and one for saving. This way your child sees how the amount in each changes depending on their spending decisions. Having a jar or a piggy bank to put loose change is a great way to celebrate money positives, as each coin (or dollar) increases the amount they’ve saved.

We’ve already mentioned letting your younger children see you use cash to make purchases, but you could also show them the receipts when you use a credit or debit card. It helps them understand that even though you’re not using coins and cash, you’re still using your saved money to make a purchase, which will be deducted from your account.

Elementary/middle school

This is a great age to help your kids find opportunities to earn their own money. Many parents decide to use an allowance that is given out as certain tasks are completed around the house. Allowances should be age-appropriate, as an 8 year old will require less than your 12 year old, but that can be decided by the parents. Allowing kids to earn their own money means they also get to decide what to do with it—spend some and save it, save it all, or spend it all. 

When they have a set allowance, it also teaches kids to live within a budget, and once the money is gone, there is no more until the next “pay day.” 

High school

By the time they reach high school, kids should have a pretty solid foundation when it comes to earning, spending, and saving. It’s also time to discuss credit cards and how to avoid falling into the debt trap.

If they’re getting an allowance, you may want to consider offering additional funds if certain tasks are completed on top of their regular chores. If your teen has a part time job and they’re thinking about going to college, this is a great opportunity to suggest saving some of their earnings to help pay for college down the road.

Another way they can save themselves from debt is by trying to avoid student loans as much as possible. Instead, get them motivated to apply for scholarships, grants, and work study opportunities in addition to their savings from any jobs.

Talking to your kids about money doesn’t have to be intimidating, and you don’t need a degree in finance to do it! Taking the time to explain money basics and helping them discover how their financial decisions all have repercussions is one of the best pieces of advice you can give them.

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