Nearly all parents and caregivers would agree that teaching kids about money is important—but it can be tricky to figure out exactly how to instill smart financial behavior. Here we’ll break down it by age so you can help the children in your life understand how to spend within their means, save for the future and build healthy lifelong money habits.
Early childhood: Ages 3 – 5
When it comes to small kids and money, it’s best to focus on basic skills, attitudes and problem solving.
- Help them understand currency. Familiarize children with bills and coins; encourage them count and sort money and identify its value.
- Show children how money is earned. Talk about your job and point out other ways people earn money.
- Instill the concept of saving, spending and sharing. Many parents use clear jars and cash to teach children how to divvy up funds and develop discipline as they save up for a desired item.
- Demonstrate that money is used to purchase items. “Help them grab a few dollars out of the jar, take it with them to the store, and physically hand the money to the cashier,” advises Dave Ramsey. On the flip side, discuss what things in life are free.
Middle childhood: Ages 6 – 12
At this age, kids are ready to start practicing money skills and honing their decision-making abilities.
- Try an allowance. As Steve Schaffer, CEO of the coupon website Offers.com told U.S. News Money, “It’s a mechanism for teaching them the value of the dollar so they can decide if they want something or not.” This might also be an opportune time to introduce the concept of banking and set up a savings account for the child.
- Discuss the future. Involve children in budget plans for your family vacation or ask them what kind of lifestyle they plan to have in the future—and help them calculate the costs and sketch a roadmap to achieve the goals.
- Develop comparison skills. As Anna Attkisson writes for Parents magazine, “One way to teach comparison shopping is to read the store’s price labels with your child, look at the size and price, and compare the bulk amount per cent. Don’t forget to take quality into account.”
Young adults: Ages 13 – 21
Here’s where the rubber hits the road: young adults are often earning and spending money—and dealing with the consequences of their decisions.
- Examine pay stubs, receipts and interest rates. Make sure young adults understand the painful effect of taxes and the potentially beneficial impact of earning interest on saved money.
- Discuss credit cards, loans and other forms of borrowing. “Teens today are consumers, pumping billions of dollars into the economy, so there’s something to be said about teaching them to use credit cards responsibly before they go off to college or out on their own,” advises Deborah Fowles for The Balance.
- Help young adults build a budget. Basic budgeting skills are crucial for long-term financial success
For more kid-friendly resources, check out the Money As You Grow program, created by Beth Kobliner as part of the President’s Advisory Council on Financial Capability. If you’re an educator, check out the Federal Reserve’s educational resource center, where you can filter by age and topic. Visa also offers interactive tools and educational materials as part of its extensive Practical Money Skills site.
If you’re looking to improve your own financial knowledge, stay tuned to our blog: We cover important concepts like managing credit inquiries and understanding debt consolidation. You can also check out our free, interactive tools for budgeting, setting savings goals and tackling debt.