What to Teach Your Kids about Money (and When)

Being financially savvy isn’t something you are just born with; you should study and practice to build your financial craft. There is no guarantee your kids will learn these skills in school.

So how can you help your kids get a better understanding of how money works and what goes into financial wellness? Here are some tips for what to cover with kids of any age.

1. Starting ‘Em Young

When your kids are about to enter school, at four or five years old, it is the perfect time to give them an idea about what money is and what it represents. Starting with the basics of showing them money, the different denominations there are and what that means to them, and giving them the chance to hold it and count it is a great way to familiarize them with money.

You don’t need to get too deep at this stage in their life; give them the basic understanding of money – things like earning money, saving it, spending it, and giving it, are the basics you should cover. Laying this groundwork can help you develop their financial wellness as they enter the next phase of their life.

2. Growing Up – School and Beyond

While your kids go through school, they learn the basics of math and understand addition and subtraction. As they increase these skills, it is the perfect time to apply those concepts to their financial literacy. Developing their understanding of saving money and the benefits of doing so will help them get a better grasp of money management.

Giving them a piggy bank to put their allowance in is a great place to start to instill the act of saving. Once that piggy bank gets full, it is time to introduce your kids to the bank. This isn’t the time to overwhelm them with the intricacies of how a bank works, but taking them in to open their own savings account and having them make deposits will give them a basic understanding of what a bank is and how it benefits them.

I had a savings account from a very early age – it’s a good idea to get them comfortable with money and what function banks have in our society.

3. Get Them Ready for Responsibility

Now that you have created a strong foundation built on the idea of saving money, this is where the life lessons kick into high gear.

As your kids end their middle school careers and move onto high school, they will look for a sense of autonomy. They want to do things with their friends, spend money when they want, and gain more control over their lives. During this time, they may seek out a part-time job to help them earn more money, and this is where it is important to continue to teach them the usefulness of financial management.

Popular part time jobs could be:

• Being a Deliveroo delivery person
• Bar or restaurant work
• Flyering/promotion (I did this as a student)

Having the responsibility of earning a paycheck and knowing what to do with that money will help them realize the value of the earned dollar. This is the perfect opportunity to reinforce the idea of saving money by putting that money away in their savings account. They could even invest in an investment account.

At this age, they also want to have more control over their money by having a debit card or at least more access to their accounts. Instilling in them the gravity of knowing that a debit card is not unlimited money (no matter how good it feels to swipe the card) or knowing how to shop online safely are all things that they should have a firm grasp of at this time of their life. 

As they prepare for the next phase of their lives, you can teach them about the responsibilities they will soon face. When they have a job, asking them to contribute to paying the family cell phone bill or making them pay for music streaming services they use will help them understand the obligations they will face when they are out on their own in the world, but in a smaller and more controlled environment. 

4. Going off on their own

Whether they have graduated from college or decided to go into a trade right out of high school, when they want to leave the nest there are still some pieces of financial advice to give them. At this time, you can help them understand all the new aspects of adulthood they will encounter.

Adulthood brings the obligation of doing taxes (and making sure you do them on time), managing student loan payments, understanding different types of debts (the good and bad), and knowing what a credit score is and how that affects the rest of their life.

Furthering their understanding of the duties they will face as a grown person will be vital to making sure the financial tips you have shared thus far don’t fall to the wayside just because they have a new sense of freedom. 

This is the time to explain how to be savvy when making big financial decisions. Being as prepared as possible before making large purchases will ensure confidence in decision making. There will be a few big purchases in life your children will be faced with, a major one of those being buying their first home.

When they think it is time to buy their first home, settling down and understanding the importance of a home loan pre-approval before they go house shopping will help guide them on their journey. Helping them to learn there are tools out there to help them make wise investments will help them make more informed and confident purchases. 

Starting conversations about money with your kids while they are young and continuing them throughout their lives will help them foster a strong sense of financial literacy and security. Being that sounding board for them will also allow them to have conversations about money and not feel embarrassed about them. Having confidence in discussing financial matters will help them make smarter money management decisions. 

Neil

P.S. If you want more of my writing, check out my latest book. It’s available on Amazon right now.