April 15, 2024 | Allison Robertson

The Importance of Teaching Kids About Money

When Should Kids Learn About Money?

As soon as your kids are old enough to count, they should be learning about money. Part of being a good parent is preparing your children for the world—and money is a very large part of our world.

It’s never too early (or too late) to start teaching your kids about finances. Here’s a look at why this is important, and 20 tips to get the conversations starting at home.

Mother and child and stressed young adult split image

A Lack of Financial Knowledge

New research shows the majority of teens feel unprepared to finance their futures. In fact, less than half of high school graduates say they were equipped with enough knowledge to successfully navigate their finances upon high school graduation.

Adult person giving money to a childKarolina Grabowska, Pexels

Financial Literacy in Schools

In response to the pandemic, which revealed obvious income inequality, as well as inflation and the resuming of student loan payments, more states are now requiring financial literacy classes in high school.

But up until now, our children were at a great disadvantage.

Students in classCathy Benscoter, Penn State Beaver

Financial Literacy in Adults

According to the 2023 Personal Financial Index report from the TIAA and Global Financial Literacy Excellence Center, American adults could only currently answer about half of the index’s 28 questions about earnings, budgets, spending, saving, investing, debt, insurance, risk, etc.

Man hand holding piggy bank with his savingsLookerStudio, Shutterstock

Emphasizing the Need for Financial Literacy

This emphasizes the need to teach the future generations at a younger age. So even if their parents are unable to help, they will learn to ask questions and find the answers.

Parents and their child calculating moneywong yu liang, Shutterstock

It All Starts at Home

Parents should not rely on the public school system to adequately prepare their children with financial responsibility. It should start at home, and at an early age. Having a consistent positive influence on money will benefit them in the long run.

Child and adult hand holding moneywut62, Shutterstock

Use a clear jar for their savings.

Although classic piggy banks are a great idea, they don’t allow the kids to get a visual of their savings When you use a clear jar, your kids can actually see their money growing.

Talk about how money grows when it is saved, and make a big deal about their jars filling up.

Money in a JarJulia Sudnitskaya, Shutterstock

Set an example with your own money habits.

Monkey see, monkey do. As we already know, kids learn through observation. Your kids will notice when you freely swipe your card every time you’re out—rather than counting out what you have and what you can afford.

If you and your partner argue about money, they will notice that too. Set a healthy example about money management.

Man and Woman arguingTimur Weber, Pexels

Show them that things cost money.

When you’re teaching kids about money do more than just talk about it, show them. Teach them to pay attention to price tags, and whether or not they need to add or include taxes.

Have them take a few bucks from their jar and take it to the store with them, and allow them to physically hand the money to the cashier themselves.

Kids buying fruit from street marketKamaji Ogino, Pexels

Teach them to make financial decisions.

Help your kids understand that if they spend their money on a video game, they won’t have enough for the pair of shoes they want as well. Help them understand how far their money will go by comparing costs and prioritizing.

Child calculating moneycottonbro studio, Pexels

Give commissions, not allowances.

Generosity is sweet, but don’t give your kids money just because you can. Pay them commissions based on chores they do around the house. This helps your kids learn that money is earned, not just handed to them freely.

Man and his daughter cleaning their houseKetut Subiyanto, Pexels

Avoid impulse buys.

When your child asks for something, they suddenly see and want, avoid saying yes. Experts suggest you wait at least a day before buying anything that costs more than $15. Teach your kids that they can use their hard-earned commissions to pay for the item they want, if they decide in a couple days that they still want it.

Kid playing with toysvborodinova, Needpix

Encourage giving.

Much like donating their re-loved items, it is important to also teach your kids about giving. Allow them to choose a church or charity, or even a personal friend who may need some help. This helps kids find that feel-good feeling when they help others.

Child packing toys for charityBlack Salmon, Shutterstock

Teach them contentment.

Kids today spend a great deal of time scrolling through everyone else’s highlight reels. It’s the quickest way to bring on the comparison trap.

Teach them to be content with what they have, and that more isn’t always better.

Three kids sitting on a coutch watching on their phonesJessica Lewis, Pexels

Give them the responsibility of a bank account.

By the time your kids are pre-teens, they should be set up with a simple bank account. This takes money management to the next level and will hopefully prepare them for managing a much bigger account as they get older.

Parents and kid making bank accountbearinmind, Shutterstock

Get them saving for the future.

As your kids reach the older years of childhood they will start having bigger wants. Whether it be a car when they turn 16, a specific college education, or maybe they want to travel. Whatever it is, have them set a goal and start saving for it.

Graduation Hat on MoneyBrian A Jackson, Shutterstock

Teach them about student loans.

When your teens are ready for college, start the conversation about how they will pay for it. Ensure they know about their options and alternatives. Student loans can be challenging to pay later, and if they can be avoided it may be beneficial.

Teen holding piggy bank and bookspathdoc, Shutterstock

Teach them about credit cards.

Credit cards can be dangerous—unless you know how to use them properly. Many teenagers have no idea just how negatively a credit card can affect them. Teach them the dangers of debt before they wrack it up.

Teenage girl sitting in a cafe shopping onlineAndrea Piacquadio, Pexels

Get them on a simple budget.

As soon as your child has their first job—whether it be babysitting or an actual retail job—teach them how to budget their income, no matter how much they make. They should understand why it’s important to make a plan for their money.

person calculating and planning budgetwutzkohphoto, Shutterstock

Help them figure out how to make money.

As soon as your child is interested in making their own money, aside from chores around the house, teach them the various ways they can do so. Odd jobs for neighbors, cutting grass, babysitting, collecting/selling scrap metal, etc. There are numerous ways kids can start accumulating some cash. This also teaches them to be resourceful.

Teen girl works as babysitter and plays with kidsDan Race, Shutterstock

Make learning about money fun.

Now-a-days there are countless apps and board games that are financially focused. Children intuitively learn through play, so gamifying early lessons in financial literacy makes sense.

Kids playing Monopolyspass, Shutterstock

Have frequent “money talks.”

Use money words, like earn, spend, and save, and explain how they work in daily life. Include real life examples like buying groceries, paying for the electricity you use, and saving for a family outing. Keep the conversation going.

Woman holding her child and reading invoiceInside Creative House, Shutterstock

Discuss needs versus wants.

Take your kids grocery shopping and show them how to make responsibly financial choices that align with your needs before your wants. For example, you put your eggs and milk in the cart before treats.

Parents and kid shopping at grocery storeDmitry Kalinovsky, Shutterstock

Explain how taxes work.

As your child gets older, they will need to know and understand taxes. In some places around the world, tax is not included in the sticker price. It is important that they understand how to calculate exactly how much something will cost before they buy it.

Kid managing money and taxesTomsickova Tatyana, Shutterstock

Explain how income tax works.

Speaking of taxes, once your child is old enough to be making their own money, ensure they understand the concept of income tax, and how their take-home pay will be different than their hourly wage—and why.

Calculator on table of documents, calculating taxesJuicy FOTO, Shutterstock

Encourage a summer job.

Once your child is old enough to start working, encourage it. And once they do, teach them how to save a portion from every paycheck. You may even consider having them pay a portion of a family expense, like the internet bill.

Young girl working at a grocery storeBearFotos, Shutterstock

Bottom Line

Encouraging financial literacy at a young age, and at home, will significantly boost your child’s chances of financial success as they get older, and hopefully change the direction our future generations are heading in regards to financial freedom.

Teen boy smiling under money rainpathdoc, Shutterstock

Sources: 1, 2, 3


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Dear reader,

It’s true what they say: money makes the world go round. In order to succeed in this life, you need to have a good grasp of key financial concepts. That’s where Moneymade comes in. Our mission is to provide you with the best financial advice and information to help you navigate this ever-changing world. Sometimes, generating wealth just requires common sense. Don’t max out your credit card if you can’t afford the interest payments. Don’t overspend on Christmas shopping. When ordering gifts on Amazon, make sure you factor in taxes and shipping costs. If you need a new car, consider a model that’s easy to repair instead of an expensive BMW or Mercedes. Sometimes you dream vacation to Hawaii or the Bahamas just isn’t in the budget, but there may be more affordable all-inclusive hotels if you know where to look.

Looking for a new home? Make sure you get a mortgage rate that works for you. That means understanding the difference between fixed and variable interest rates. Whether you’re looking to learn how to make money, save money, or invest your money, our well-researched and insightful content will set you on the path to financial success. Passionate about mortgage rates, real estate, investing, saving, or anything money-related? Looking to learn how to generate wealth? Improve your life today with Moneymade. If you have any feedback for the MoneyMade team, please reach out to [email protected]. Thanks for your help!

Warmest regards,

The Moneymade team