“I wish I learned about money when I was a kid.” I have heard these words frequently throughout my adult life. Whether it's saving enough, managing credit cards, understanding taxes, repaying student loans, or investing, American adults wish they had learned more about money. It makes sense because—according to Bankrate’s Annual Emergency Fund Report—50% of Americans do not have enough to cover a $1,000 emergency.
Rather than wishing they had learned about money as kids, why not teach them? Research suggests that youth can begin learning about money as early as age five, and many financial habits are formed by age 13 or even sooner. With that in mind, let’s discuss how and when it’s appropriate to start talking to kids about money and how to use various tools to keep the conversation going. Before making any decisions, I recommend consulting with a financial advisor or professional who can assist you in finding the best options for your family.
Need help figuring out how to start talking to kids about money? Start with values. Explain what you and your family value. It could be art, electricity, your home, quality family time, good food, your faith, etc. By starting conversations with values, kids can see the patterns that follow those values. Those patterns impact earning, investing, and spending habits.
Here are some age-appropriate ways to continue the conversation:
Ages 3-5
Introduce younger children to coins and bills. Coin and bill identification provides an opportunity to learn about money and its value. It’s also an ideal time to introduce the concepts of spending, giving, earning, and saving. Children can use a piggy bank or a money box to see their money accumulate and learn to categorize it—a concept that will continue as they open their first bank account.
Ages 6-10
Elementary students should learn about wants vs. needs, consumers and producers, supply and demand, and the costs of goods and services. A great way to understand these concepts is by creating a mock business. Students can participate in programs like Boerne Lemonade Day to ignite their entrepreneurial spirit. They will apply critical thinking skills, engage in the creative process, and have the opportunity to earn money based on their own ideas. Mock businesses help build confidence, develop public speaking skills, and foster self-esteem for the future.
Ages 11-13
Middle school students should begin to learn about the consequences and risks associated with money. This age is an ideal time to teach budgeting and planning for the future. Emergencies happen, and life doesn’t always go as planned, so explaining how to prepare is crucial. Additionally, it’s an excellent opportunity to introduce concepts of investing and compound interest. I recommend that students read Growing Money: A Complete Investing Guide for Kids. It’s a short read and an excellent resource for students to learn about the history of trading, the stock market, and investing.
Ages 14-17
These young people are preparing for adulthood and may be experiencing many firsts: their first job, first car, first paycheck, and first credit card, among others. Teenagers will have the opportunity to earn and manage money through employment. Teens should have access to a bank account monitored by a parent/guardian, especially if they have a job. Saving for adulthood and understanding taxes are two areas where young people can benefit during their teenage years. Teens should also be aware of credit cards and how debt works, including understanding interest rates, credit scores, and credit reports. Post-graduation planning should be a topic of conversation as well. Next Gen Personal Finance’s game Payback offers a free online game for students to understand student loans and college planning better.
Cultivating healthy money conversations at all ages is critical for establishing a solid financial foundation. Youth who are literate in financial matters are better equipped to make informed financial decisions and promote stability. These suggestions are recommended and are not an all-encompassing list. The overarching goal is for children and families to engage in healthy money conversations early and often. Financial education is a lifelong commitment. As students progress through different stages of life and their circumstances change, it's essential to foster an attitude of continuous learning about how to make money work for them rather than the other way around.
Resources
thewealthplayground.com | The Wealth Playground is my organization, and we offer an award-winning children’s book series, financial workshops, and curriculum development for youth programs, schools, and foundations.
lemonadeday.org/boerne | Give your kids a hands-on, delicious learning experience. Sign your student up for the 2024 Boerne Lemonade Day on May 4, 2024.
Growing Money: A Complete Investing Guide for Kids by Gail Karlitz and Debbie Honig
timeforpayback.com | Help your teen prepare for the world of college and student loans with Next Gen Personal Finance’s free online game.
Youth can learn about money as early as five, and many financial habits are set by age 13.
Cultivating healthy money conversations at all ages is critical to establishing a solid financial foundation. Youth who learn about financial literacy are more informed to make better financial decisions and promote stability.