Teaching kids about money

Part of raising children is teaching them life skills they can use as they move into adulthood and beyond. 

If you have young kids, you might assume it’s too soon to start teaching them about money, but the sooner you start, the better. The following are some age-appropriate tips for teaching kids about money from childhood through to college.

Young kids (ages 4–9)

If you have young children, keep your lessons simple. Teach your child about the different coins and what they’re worth. If possible, use cash to pay for purchases so your child can physically see money exchanging hands, which can help them better understand how money is used. 

If you don’t like to use cash, show your child the receipts for your purchases. This way, they can see exactly how much things cost and gain a fuller understanding of what money is and what it’s used for.

In addition to teaching your young child about using money for purchases, it’s also important to teach them about saving. Tell them about your savings goals and keep them updated on how you’re doing. You can also get them a piggy bank or savings jar where they can save coins and watch them pile up. If there’s a special book or toy they want, explain how saving up their money can help them buy it for themselves, which teaches goal setting.

Older kids and teenagers (ages 10–18)

Once your child is a little older and has a good grasp on what money is and how it’s used, you can apply some different tactics to help them learn about money. 

If your child expresses an interest in having their own money, consider giving them an allowance. You can assign regular chores around the home in exchange for their allowance so they start to understand how money is earned. As they get older and take on more chores, you can give them “raises” similar to ones they’ll receive when they have paid jobs.

Having a set allowance, whether it’s a weekly amount or a monthly amount, can help children learn how to manage their money. If they know they’ll get the same amount on a certain cadence and that once it’s gone they have to wait for the next “payday,” they can learn how to manage a budget. 

For older children, you can set up a bank account so they have full control over their own money. They can use this account when they get their first job.

You can also explain the importance of giving money to causes that mean something to them. If they’re passionate about animals, make a donation jar to give to the local animal shelter. If they want to help less fortunate children, the contents of the jar can be donated to a local children’s charity.

College students (18+)

For many people, college is the first time they’re truly on their own and can make many of their own decisions about money. 

Because college comes with numerous expenses, it’s important to teach older teens how to use credit cards responsibly before they head off. They’ll likely need to make multiple purchases using a credit card, and using it irresponsibly can have long-lasting effects on their financial future — and yours, if you’re the owner or co-signer of their credit card account.

Part of understanding how to use a credit card responsibly is understanding how interest works. Teach them that paying off their credit card balance in full each month will help them avoid accruing interest on their account, which can help prevent them from spiraling into unmanageable credit card debt. They also need to understand that putting a purchase on a credit card has consequences: That balance will need to be paid off. Having a credit card doesn’t mean they can buy whatever they want whenever they want.

There’s no better time than the present to start teaching your children about the value of money and how to save. The sooner you start instilling these values in your children, the more responsible they’re likely to be with their money once they’re adults.