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11 Important (Age Appropriate) Money Lessons You Can Teach Your Kids

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Money lessons for your children may seem overwhelming, but they're not. Here are 11, simple age-appropriate ways to teach your kids about money.

The way we manage money as adults has a lot to do with how we learned (or didn’t learn) about money growing up. Financial skills are crucial for everyday life and there are certainly some money lessons I would have rather learned in my home growing up instead of the hard way when I became an adult.

The truth is, there’s a lack of financial literacy in our country so the responsibility of financial education usually falls on parents since schools do not provide much financial education.

If you agree that money isn’t a taboo subject and should be discussed openly in your household, you’ll want to teach your kids valuable money lessons that they can take with them when they get older.

Wondering which money lessons and topics to expose your children to and when? Here are 11 age-appropriate money lessons you can teach kids to help them become more financially confident when they grow up.

Ages 3-5

 

You Can’t Have Whatever You Want Instantly

 

Before your child goes to school, you want to teach them that things cost money and they can’t have whatever they want instantly. You may see an example of parents teaching their kids this when you witness a child screaming and crying in the checkout line at the store because they can’t have something.

They may be upset for a few minutes but they’ll survive. It’s important to teach your child how to wait for some of the things they want as early as possible. That way, they understand that some purchases are not urgent. If your child really wants something, tell them to wait and then go back to the store a few days later to get it.

Saving, Spending, and Giving

 

These are three easy concepts that you can teach your kids in this age group. They’ll naturally see you spending money and understand the spending aspect quickly. You can also talk to them about how you save some money for later instead of spending it all at once. You can even open a savings account for them AND earn money on the interest through banks like Ally or Barclay Savings.

Finally, practice giving to others; whether it’s making monetary donations, paying tithes, giving to the offering at church or giving away used toys to needy families a child is never to young to develop the habit of kindly giving to others.

Ages 5-8

 

Money is Earned, Not Given

 

It’s important that kids understand money is not just given away. As a parent, you provide for your child by satisfying their needs and wants. However, when it comes to money, you must make sure your child understands that you have to work hard to earn money and can’t expect it to be handed out for free.

At this age, you may want to assign your child a few chores and provide them with an allowance. Or, you may want to take them to work with you one day so they can see how you earn money.

be wise in How You choose to Spend Money

 

Explain to your child that every time you spend money, you’re making a choice and should choose wisely because once the money is gone, it’s gone. My son is 7 so we are currently working on this. I give him choices all the time when it’s time to spend money. I’ll ask him to make a choice in the grocery store or regarding an activity or event at his school.

If he receives birthday money, I give him the option to save it and explain the pros and cons of that choice.

Easter recently passed and I gave my son the decision to choose between a coloring book or a DVD for his Easter basket. He loves to draw but to my surprise, he chose the movie that time around. Giving my child the choice also helped me save money because I didn’t have to purchase something that I thought he wanted but really didn’t.

Ages 9-11

 

Budgeting Can Help You Control Your Spending

 

When your child gets in the 3rd or 4th grade, you can start teaching them about the importance of budgeting and picking where your money will go. You can make it a fun game and assign them the task of creating a budget for their birthday party or allow them a $10 budget to use for snacks at the grocery store.

Show them how to keep track of their spending by writing everything down or typing it up in a document. Also, explain to them the consequences of going over budget (getting into debt) and let them experience it first hand if they do go over budget.

Everyone Has Needs and Wants

 

This is no secret, but you can help your child determine their own needs and wants once they understand this concept. This will allow them to prioritize what they need over something they want.

When I was growing up, my parents split up, which led to my mom becoming a single mom; my sisters and I started to understand that our needs mattered much more than our wants. We knew we needed a roof over our head and food each day as opposed to new shoes and fancy cell phones.

Ages 11-15

 

Investing Helps You Grow Wealth

 

One of the best ways to teach your child about investing and compound interest is to show them first hand. Let them look at your portfolio and investment accounts and explain how investing works.

You can teach your kids about stocks way before they reach this age group. Start by purchasing a few stocks so they can track how they perform over time.

Save For Large Purchases

 

This is another important lesson that is great for teens to learn. Pretty soon, they will be asking for a car so a good option would be to have them save up to pay for a portion of the price of the car or the entire purchase.

You can talk to them about loans and debt and demonstrate how saving up for large purchases early on can give them more options and help them avoid paying interest on debt.

Save a percentage of your paycheck

 

When your child gets their first job, they’ll be super excited to start earning their own money, but you must teach them how important it is to save a percentage of their paycheck as opposed to spending the entire amount. Whether they save 5 percent or 55 percent doesn’t really matter because they key is to adopt the habit of saving and paying yourself first early on.

My first job was a summer internship and I regret spending every cent of my paychecks because I have no idea what I spent the money on.

If you haven’t already, open up a high yield savings account in their name and show them how to transfer money each time they get paid.

16 and up

 

College costs and student loans

 

It’s crucial that you discuss college and the costs of higher education before your child graduates high school. Discuss their options with them and look at schools online to compare degree programs and tuition costs.

Also, discuss student loans in detail and explain how they work and what alternative options there are.

Money lessons for your children may seem overwhelming, but they're not. Here are 11, simple age-appropriate ways to teach your kids about money.

Credit Cards Aren’t Free Money

 

How to use credit cards wisely should be another important discussion you have with your teen. It’s extremely easy to get into credit card debt once you turn 18. Show your son or daughter how to properly use a credit card and what to look for in a good card if they choose to sign up for one after turning 18.

Explain the importance of credit and how credit cards are actually meant to be used as a tool to build credit.

Teaching your kids about money can be a fun and rewarding experience. It’s a priceless gift that they can take with them throughout their lives. Whether you’ve made mistakes with money in the past or not, realize that you have valuable experience and insight to offer and that your kids actually want to learn from you.

The last thing to say is just a note to remember that these age-appropriate money lessons are just guidelines. Use them to introduce your child to various financial concepts whenever you feel they’re ready and eager to learn about them.

 

What money lessons do you remember your parents teaching you? What do you hope to teach your kids about money? Do you include your children in family discussions on money?

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Chonce is a freelance writer who’s obsessed with frugality and passionate about helping others increase their savings rate, eliminate debt, and work toward financial stability. She chronicles her journey with balancing motherhood, work, and finances on her blog, MyDebt Epiphany.com

2 Comments

  • I think it’s really important to teach kids to respect their parents money. When I was a teen one of my family friend’s daughter was a total pain in the ass. The daughter would constantly badger her parents to donate money, never mind the fact that the parents weren’t well off financially and could barely afford their retirement plans. A lot of kids see their parents’ money as “free”.

  • I’ll have to keep this handy for when I have kids. I have many fears about having children, and not teaching them enough about money is one of them.

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