How to Teach Kids About Money

Why Start Teaching Kids About Money Early?

It’s never too early to lay the groundwork for good financial habits. By introducing financial concepts at a young age, you’re helping your child develop the building blocks for managing money responsibly as they grow. With fun and age-appropriate methods, you can create an engaging learning experience that will resonate with them long into adulthood.

Financial Lessons for Ages 3 to 5: Make Money Fun and Relatable

For young learners aged 3 to 5, simple books, games, and activities are ideal for introducing financial concepts. Here are a few ideas:

– Read Money-Themed Books Together: Look for age-appropriate books that discuss basic money ideas, like saving and spending.

– Interactive Play with Fake Money: Games like playing “store” with pretend money help children learn to identify and count currency while gaining an understanding of basic concepts such as exchanging money for goods.

– Simple Activities to Introduce Saving: Using a clear jar as a piggy bank lets them watch their savings grow, providing a visual understanding of saving.

“Young children absorb information like sponges, so I would recommend looking for everyday opportunities to introduce money-related concepts in an age-appropriate way. For example, when you withdraw cash at an ATM to buy lunch, take a moment to explain that the money is something you earned from working and are now using to pay for food” advises expert Cassandra Riggin, Financial Wellness Education Program Manager at UVA Community Credit Union.

Starting these concepts early builds familiarity, making money management less intimidating down the road. Introducing these concepts early creates familiarity, making money management feel less intimidating as they grow older.

Teach Money Management to Ages 5 to 6: Introduce Allowances and Budgeting

Around ages 5 or 6, children are ready for their first lessons in money management through an allowance. Giving them a small weekly allowance helps them understand the value of money, and it’s a hands-on way to learn budgeting and saving. Tips to introduce these lessons include:

– Set Spending and Saving Goals: Encourage them to set goals for their allowance, like saving for a toy or treating themselves to something small.

– Match their Contributions: Motivate them to save and introduce the concepts of compound growth by offering to “match” their contributions, like paying $1 for every $10 they save.

– Budget Together: Show them how to prioritize and track their spending, saving, and giving with a simple budget. 

Ages 7 to 12: Build Responsibility with Savings and Spending

Riggin suggests, “Budgeting activities for elementary students can be as simple as helping them create a budget for back-to-school supplies, a vacation, or even a pet they want. By linking the activity to something that matters to them, you can engage their interest. As they get older, you can take it a step further—assist them in budgeting for their first car, college, or apartment.”

During elementary school, you can help children deepen their understanding of money by discussing real-life scenarios. Here’s how to continue the learning journey:

– Encourage Decision-Making: Let them make small spending choices so they can see the consequences of spending versus saving.

– Teach Comparison Shopping: Show them how to compare prices and make more thoughtful purchases.

– Introduce Chores for Extra Income: As they get older, consider giving them opportunities to earn extra money through chores, helping them understand the link between effort and earnings.

Mahogany and Friends

Charlottesville’s own Janasha “Jay” Bradford is a Financial Advisor and the author, founder, and CEO of Mahogany and Friends. Committed to bridging the gap in financial literacy among children, especially in Black and Brown communities, she has created engaging stories that introduce young readers to essential financial concepts. Her books, such as “Mahogany Goes to Wall Street” and “Malcolm’s Master Plan to Gazillionaire,” use relatable narratives to teach children about saving, budgeting, and investing. Through local events and readings, Jay connects with families to inspire young minds and instill lifelong financial skills. It is never too early to start to teach kids about money.  

Teenagers (Ages 13-16): Encourage Greater Financial Independence with Accounts and Budgeting

Once kids are old enough to earn money on their own, typically between ages 13 and 16, they’re ready to learn more complex financial concepts like banking and budgeting:

– Open a Savings Account Together: Help them gain real-world experience managing money! Guide them through opening a savings account and reinforce the importance of building a healthy emergency fund. Remind them of the role interest plays in saving money. .

– Introduce a Checking Account When Ready: When they’re responsible enough, opening a checking account gives them practice in monitoring their spending and using debit cards wisely.

– Check-In on Their Finances Regularly: Sit down together to review their account statements, discuss any questions, and make sure they’re on track with their earnings, savings and spending goals. Whether they babysit, mow lawns, or work as a camp counselor, there is something everyone can do to get started on a path to financial independence.

According to Riggin, “A crucial money management lesson for teens is learning to view money as a finite resource. Teaching them how to prioritize expenses, track spending, and save for the future is an essential life skill that will influence their financial habits for years to come. The UVA Community Credit Union has a wide range of financial education resources for all ages, but we believe most people learn best through experience. That is why we created the Teen Rise Account. Our goal is to combine hands-on experience with financial education, building financial capability for the future.”

“By learning to manage a checking account, budget, and save from an early age, teens develop the skills needed to make informed, confident financial decisions throughout their lives, while avoiding the costly mistakes of financial mismanagement”, advises Riggin.

Tourists getting public transport tickets at a machine at a tram stop. young couple of male and female taking cash money from the bank atm machine.

Woman and her daughter planning budget at home

teenager using laptop and credit card at home

Model Positive Financial Habits

Children learn by example, so demonstrating positive financial habits is just as crucial as any formal lesson. Be open about budgeting, saving, and even discussing financial challenges. When you model a healthy relationship with money, your children are more likely to follow suit. 

Encouraging Financial Growth Through Continuous Learning

Financial literacy is an ongoing process. As your children mature, continue engaging them in discussions about money. When they’re ready, introduce more complex topics like credit, investing, and debt management, gradually deepening their financial knowledge.

Teaching kids about money doesn’t have to be complicated, and it’s never too early to start. By breaking down financial concepts and tailoring lessons to each age group, you can set your child up for a future of financial responsibility and independence. With the right tools and a little patience, you’re helping them build lifelong skills for smart decision-making, saving, and financial growth.