How to Teach Your Kids About Money

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The ideas about money that your kids learn at home often stick with them throughout their lives. For that reason, it’s never too early to begin helping your kids develop financial habits. 

By introducing financial concepts early, like how money works and the basics of budgeting and investments, you can help your kids build a solid foundation for managing money effectively for years to come. The following tips can act as a roadmap for teaching your kids about money as they grow up. 

Toddlers and Preschoolers

Speaking casually about money around your kids from a very young age can help them feel comfortable with the topic as they grow older. By setting the expectation that money is a regular part of life, you can help your children avoid the anxiety many people experience about the topic. 

For toddlers and preschoolers, you can start incorporating very basic ideas about money into playtime. Children may want to play pretend grocery store or restaurant. Take that as an opportunity to teach them the names of coins and bills. They could learn about trading these objects for food and toys. 

Elementary School Children

As your children age, you can start giving them an allowance. Encourage them to save a portion of all the money they earn, as well as birthday money or other gifts. Ask them about toys, books, or video games they might want to help them establish a savings goal. 

Mark their progress somewhere visible, like on the refrigerator.  When your kid meets their goal, celebrate their accomplishment—after all, saving up for something they want is a big deal. This approach teaches them about saving money in an encouraging way. 

Preteens

Once your kids are a little older, you can start talking about more complicated personal finance concepts with them. Teach them basic vocabulary words like “checking account,” “balance,” “interest rate,” “debt,” and “credit.” Invite your kids to make suggestions for the family budget, like switching to new grocery brands or setting vacation goals. 

Consider bringing your preteen with you to the bank or to check in with your financial advisor. Encourage them to ask questions afterward and spend some time together discussing the answers.

You could even introduce the stock market to your preteen by letting your child identify companies they like and watching how their stocks perform over the next year. 

Teenagers

As your kids approach adulthood, it’s important to help them develop a budget. If your teenager has a job, go over their first paycheck together. This will help them understand how income and tax deductions work. If your teen doesn’t yet have their own bank account, help them open one and discuss the responsibilities that come with it. 

You could also help your kid begin building a credit history and learn healthy credit habits by adding them as an authorized user on your account. To prepare them, you can discuss the factors that make up a credit score and review their credit report. Emphasize the importance of maintaining minimal debt and making on-time monthly payments.

Teaching your kids about money is a gradual process that evolves as they mature. By starting early and building on their knowledge step by step, you can equip them with the financial skills they need to make informed decisions and manage their money wisely throughout their lives.