How to teach your kids about money at every age

Mother and son putting money into a piggy bank

April is Credit Union Youth Month, and what better time to remind you about the importance of teaching your kids to save money? Today, financial literacy is one of America’s biggest issues, so the sooner your children understand the how and why behind saving their hard-earned pennies, the brighter their financial future.

Effectively communicating the importance of saving for a rainy day can be quite the challenge for parents, especially because stashing your cash isn’t always fun. That’s the secret, though. Saving CAN be fun if you make it that way, and once your kids realize it was all a lesson, they’ll already understand its importance. Mission accomplished!

Here are some creative and practical ways to tap into savings fun and prepare kids of all ages for a smart and responsible financial future:

Preschoolers & Kindergarteners

Visit your local financial institution

Don’t forget—your children are often watching you! A study by the University of Cambridge found that money habits in children are formed by the time they’re 7 years old. If you set a good example for your children now, they’ll be more likely to follow it in the future.

One of the easiest ways to start is with an afternoon outing to your local bank or credit union. Kids are curious, and we’re betting the drive-thru is far less interesting than what’s inside. Schedule a short tour and consider opening a savings account for your child when you’re done. Georgia’s Own’s Coindexter Club® is a great way to start learning about money and interest. An account for a child under the age of 13 can begin with an initial investment as low as $5.00 and will start earning interest at $5.01. Which leads us right to…

Start saving and setting goals

Gone are the days of the pink ceramic piggy bank with the curly tail—we’re going high-tech here. Purchase an automatic coin-counting bank so your child can keep track of how much money they’re saving and spending. It’ll help with addition and subtraction skills, and they’ll love the pride and satisfaction they feel when they can actually see their progress.

Once they have the hang of saving, start adding savings goals. When they’ve hit their goal, you can reward them with prizes like a special trip to the zoo or an additional contribution to their savings. Savings is the most important financial habit to instill early on, and this tip can easily be adjusted with age.

Distinguishing wants versus needs

Ever heard, “Look at this!! Can we get it please?!” as you’re heading towards the checkout? This age group can easily give in to impulse buys, especially if they are using someone else’s money.

Encourage your child to use their hard-earned allowance to pay for these purchases instead. Helping them distinguish between what they really want and what they really need will help them think harder before spending their own money. Another good tip is to encourage your child to sleep on it—instead of buying an item right away, wait at least a day before they commit to the purchase. The item likely won’t sell out overnight, so they can make that money decision with a more level head the next day.

Pay it forward

Teach your children to be generous. While healthy spending and saving is important, the value of generosity trumps them both. Whether it’s with money, time, or talent, it’s important to give back to the community. You can volunteer together to pack lunches for the homeless, visit a nursing home, or fold clothes at a thrift shop. No matter what they choose, over time they’ll see how giving doesn’t just affect the people they give to, but the giver as well.

Elementary Schoolers

Play to learn

Board games are fun activities you can enjoy with the whole family while secretly teaching them about money. Buy some property and build some hotels in Monopoly Jr., go to college and choose a career in The Game of Life, and get to the next month without blowing your entire paycheck in Pay Day. Each one requires wise financial decisions and includes a surprise monkey wrench or two along the way!

Video games like Animal Crossing as well as computer games are also a great way to introduce money management. Try Peter Pig’s Money Counter. It’s an interactive game from Visa® that teaches counting skills and savings strategies to kids from ages 5-8. For your littler ones, Cash Puzzler is a game that lets 3-to-6-year-old kids put their memory to the test by putting scrambled puzzle pieces together to form images of different dollar bills. For your sport-loving kids who are ages 11 and up, check out Visa’s NFL-themed Financial Football game, which focuses on money management. And The Payoff, for ages 14 and up, is played in a web-app that simulates a mobile phone, allowing players to chat with characters, check their bank, open fake websites, check their emails, and more.

Let ’em earn it

Do you have a child who loves to vacuum or fold the bath towels? Do they watch you mow the lawn or water the plants? Get them involved in age-appropriate chores and give them an allowance so they understand how money is earned. They’ll think it’s fun, and you might get a little help around the house.

We know you don’t always get to do the things you enjoy when you’re earning a salary, so toss in a not-so-favorite chore every now and again as they get older. While not as much fun, it’s a good reality check!

Are there other chores that need to be done in the house? Make a list of things that need doing and assign a payment amount to each one. If your child is saving for something special or wants a side hustle to supplement their allowance, they can choose an additional chore and get paid for completing it.

Find their entrepreneurial spirit

Is your child a crafter or an artist? Do they love to bake brownies? There are tons of opportunities to sell things in the neighborhood (supervised, of course). Try setting up shop at the home swim meets, during the neighborhood garage sale, or at the holiday craft show. Discuss the cost of the ingredients and supplies, the price of the items, and how to calculate a profit. If you have an older child, help them design a colorful flyer to drum up some dog sitting, lawn mowing, or mother’s helper opportunities.

Tweens & Teens

Teach your gamer how to game

Have a gamer? There’s a huge market for pre-owned video games. Talk to your child about buying certain items new or used and the savings opportunity it can offer. If you’re making the purchase, you might even consider giving your child the amount you saved a time or two as a way to emphasize the impact.

This is also a good time to discuss selling items, like old video games, toys, and electronics as a way to make some extra money and clear out that clutter. Explain to your child that when they sell items that they no longer use, the funds could be reinvested into something else they’ve been swooning over—or they can save it in that nifty coin-counting bank! As the adult, you’ll want to list the items for sale on the resale sites, but have the kids help take pictures, write the descriptions, and set prices.

Stick to a budget

Have your child grab a calculator (or your smartphone) and head to the grocery store together. Before you leave the house, though, set a budget for your shopping trip. As you walk up and down the grocery aisles together and put items in your cart, ask your child to add the cost of each item to your running total, being mindful of your budget.

Compare brands and pricing, and explain the benefit of buying items on sale. Did you bring your coupons? Ask your child to match them with the appropriate items and then add the money you saved. What was the goal, and was it more or less than the last trip? As your kids age into teens, you can add in new concepts, like how to create a monthly budget, calculating fixed and variable expenses, and more.

Introduce them to investing

Once your kids have saved some money, you can consider introducing the concept of investing. With your younger teens, try purchasing a blue-chip stock with fictitious dollars and having them track the daily market fluctuations. How much money would they have lost or gained in three months, six months, and a year? Do the same with a penny stock and you can introduce the idea of risk and return.

If they’re older and you’re already an investor, consider opening a custodial brokerage account for them or helping them purchase fractional shares. Keep in mind the potential tax considerations for custodial accounts and work with an advisor to ensure they would be appropriate for your situation.

Build that resumé

Your teen is likely babysitting, mowing lawns, or engaging in some other entrepreneurial activity to earn a few bucks. Encourage them to keep track of their earnings and brainstorm with them about how they can improve and expand their business. If they’re old enough, a summer job may be a good way to introduce the concept of taxes.

Key takeaways

  • Kids are always watching–so be sure to set a good example with your own finances and start introducing these concepts as early as possible. While it’s never too late to start, kids have their money habits set young.
  • Some of the most important concepts to cover are savings, budgeting, and paying it forward.
  • Talking about money may not sound fun, but it can be for both you and your kids!

Whether it’s across the kitchen table, on the way to a baseball game, shopping for school supplies, or tucking them in at night, there are an unlimited number of ways to work financial responsibility and savings into the conversation. The most important thing is to get started early and to continue making time to discuss financial responsibility as your kids age—but it’s never too early or too late to start teaching your kids about how they can create a more financially stable future.

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