Teaching your kids about money

Talking about money can be uncomfortable, but studies have shown that early financial literacy helps prevent long-term personal stress and risky financial behavior. Kids learn about the value of money early on — some experts even say our attitudes toward money are set by age 7! If you are a parent, auntie, cousin, or caregiver, you can help kids learn lifelong money lessons.

Start early with age-appropriate experiences

• Show kids the coins, cash, or card that you use when you shop.
• Talk about prices and sales tax by looking at your receipt when you get home later.
• Skip the mobile app once in a while and bring kids to the bank to deposit checks to your account.

Build habits together

• You don’t need to have serious or structured discussions about money all the time. Take advantage of your day-to-day activities to set a solid foundation.
• Stash your pocket change in a piggy bank. Kids love to learn about coins and money by handling them. Every week or month, count your savings to see how they have grown.
• Make Monopoly a regular part of your family game night. Kids won’t care that you’re actually teaching them an important life lesson while you charge them rent for landing on your property.
• When you’re out for ice cream or buying a toy, consider letting them hand money to the cashier. Show them how to figure out the change.

Financial health is a marathon, not a sprint

• If you have a partner, take turns paying when you go out to eat, buy groceries, or pay utility bills — even if the money comes from the same account. It’s important for kids to see that we all have a connection with money.
• When you use a credit card, explain how credit is different from cash. Teach your kids about why you might buy something with credit instead of cash, and vice versa.
• Consider modeling their allowance like your paycheck. Take “savings contributions” out of their allowance and deposit funds into a high-yield savings or investment account. Then sign the account over to them when they reach a milestone like high school graduation or moving out on their own. They’ll have an earlier understanding of how real paychecks work and be overjoyed that you helped them make gains on what they earned.
• Showing kids that financial mistakes can happen — and what to do about them — sets a powerful example. Share what you wish you’d done sooner (like start saving for retirement) and what you wish you’d done less (like rack up credit card debt) to help your kids avoid making the same mistakes.

This is a conversation that will continue over time and evolve to meet kids’ maturity levels and real-world events. It might not always be easy, but financially literate kids will turn into financially secure adults who thank you later.

Sources:
“Fun Ways to Teach Kids About Money,” U.S. News (usnews.com), April 7, 2021
“Are You Teaching Your Kids the Wrong Money Lessons?” The Balance (thebalance.com), July 31, 2021
“The Most Important Lesson You Are Not Teaching Your Kids,” Investopedia (Investopedia.com), January 16, 2022