When to Start Teaching Your Kids About Finances

There’s no shortage of lessons a parent can teach a child. From sharing, riding a bike, cooking, and driving, parents are constantly teaching their children through instruction and example. One lesson that often slips through the cracks is how to be smart with money. In fact, a recent study by the National Endowment for Financial Education found that only 24% of millennials demonstrate basic financial literacy. With school-supported personal finance programs few and far between, it is often a parent’s responsibility to teach their kids about spending and saving.

No matter how savvy you consider yourself, there are plenty of ways to teach your children invaluable financial literacy skills at any stage. As you’ll see below, it is truly never too late (or too soon) to start learning.

Ages 4-6

Small children may be too young to understand the value of money, but the perfect age to begin counting with coins. Start to teach your toddler the difference between pennies, nickels, and dimes – just make sure they don’t swallow them!

Play store: It’s time to redefine the “Mom and Pop” shop. Give your child a few dollars to go shopping for items throughout your house. As your toddler gets older, you can start teaching them to assign prices and values to different things.

Ages 7-10

Start saving: Many banks don’t allow children under a certain age open an account, but now is when that piggy bank really comes in handy. Better yet, have your child save their money in a glass jar, so they can literally see how their money stacks up.
Open a lemonade stand: This classic childhood activity is the perfect opportunity to teach your future entrepreneur the value of hard work. Have your child use their allowance to shop for the ingredients, mix the lemonade, make the signs, and launch their lemonade empire.

Ages 11-14

Open a bank account: Make your next trip to the bank a special occasion and set up your child’s first personal account. Be sure to ask your banker if they offer children’s accounts with no fees or minimums. As the money accrues, you can start to explain how interest works as an incentive to save.
Talk about credit: One of the trickiest money concepts to master is also one of the most important. Though 18 is generally the youngest you can be to apply for a credit card, the sooner your child understands the risks and rewards of credit, the better equipped they’ll be to use it responsibly to avoid debt later in life. Explain how you use credit to your child and educate them on how interest works – the longer you take to pay off your credit card, the more money you owe.

No matter what age your child is, teaching them about finance is an invaluable way to help set them up for future success. Start now to help them build the foundation for strong financial literacy and independence. Simply talking about money with your kids can help empower them to start asking questions and developing skills that will last a lifetime.

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