The money habits and financial topics children are exposed to growing up greatly influence their relationship with money later in life. Even if you don’t think children see how you deal with money, being a good example early on can help them form better habits later.
There are many ways to teach your child about finances that can help them learn important money lessons. Be open about money topics such as saving and spending, explain needs vs. wants, and your financial choices while shopping. You can start teaching your child about finances at any age, but their age can dictate the best lessons to teach. Here are some ideas of what to kids should learn from very young into late teen years.
Ages 2-5 years
For younger children, lessons regarding money should be simple. Introduce the idea that most things cost money and that money must come from somewhere, such as a job. Discuss your job with your child and have them learn about other people's jobs to give them examples of how adults can earn money.
Teaching your little one the difference between needs and wants is another valuable lesson for younger children, such as the difference between needing groceries for dinner versus wanting ice cream for dessert.
Ages 6-12
Once kids hit school age, they can learn many more lessons about money. Introduce them to making financial choices, compare options at a grocery store or look at the prices of different meal choices at a restaurant. Discuss the options and look at the prices, going over the concept of value.
If your child has an allowance, this is a good time to show them how to save. If they already have a savings account, make it a regular thing to go to the bank to put in money, or complete this digitally with them. This way, they can see where their money is and watch it grow over time.
If you don’t already, set up a savings account for your child to begin growing their savings. At Credit Union of Denver, you can open a Youth Savings Account for your child ages 0-17 with you as a joint owner. They can begin earning interest while building good savings habits.
Ages 13-17
At this age, kids might begin to earn more money from a part-time job. Talk to your child about putting a specific amount away in monthly savings and setting short- and long-term saving goals, such as college or a car. Help your teen create a budget so that their allowance/income lasts until the next while covering their needs and wants. Show them how you budget as an adult and the different parts you need to allocate for.
This is also a good time to start talking to your child about credit and debit cards. Helping them understand the difference between the two may impact their making smart financial decisions later. Set your child up with a debit card, so they can spend their money out of their own checking account as if they were paying with cash.
At Credit Union of Denver, you can add a Rewards Checking Account to their Youth Savings Account (Age 12-17). This comes with a debit card, and you, as the adult, can set daily spending limits and alerts and help keep watch over their accounts as they learn to be more financially independent.
Ages 18+
Even though this is a time when your child is legally an adult and can be on their own, the lessons shouldn't end. Suggest using a credit card for necessary items, such as gas to begin building good credit. This way, they aren't using the credit card as their only payment method but will use it enough that there is something that they will need to pay off every month.
Talk to your kids about emergency funds, where they have a certain amount set aside in case of an emergency. Even if they may not need it right now, starting to save for towards an emergency fund now can be helpful when they move out and are on their own.
Teaching kids about money at every age, is an investment in their future. By instilling financial literacy early on, you are equipping them with the tools to make informed decisions, develop responsible money habits, and build a secure financial foundation.
For more ways to foster financially savvy children, check out our financial education platform with lessons for people of all ages on important money topics. It’s A Money Thing has fun bite-sized financial education videos that make understanding money concepts easy.