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How To Teach Kids About Money

Updated: Mar 13

This information has been kindly supplied for my blog by annunity.org and you can read the full post by clicking the link at the end of this post.


It’s never too early to begin teaching your kids about money. But doing so is not as straightforward as you might assume. Some parents don’t feel confident enough in their own knowledge of financial matters to be comfortable teaching their kids about money. Others believe it’s inappropriate to burden young children with conversations about money or think, mistakenly, that children are too young to understand financial concepts.

In fact, researchers from the University of Wisconsin-Madison studied the behaviours and attitudes of fourth and fifth graders who were exposed to financial education and concluded that “younger students can learn financial topics and that learning is associated with improved attitudes and behaviours which, if sustained, may result in increased financial capability later in life.”

Beth Koblinger, author of the New York Times bestseller “Make Your Kid a Money Genius (Even If You’re Not),” wrote an article for NPR’s Making Sen$e, in which she described her encounters with parents of all economic backgrounds during a recent book tour. She realised that all parents, whether very wealthy or middle-income earners, had the same questions:


  • When should I start talking to my kid about money?

  • How do I teach the value of dollar?

  • How do I convince my kid that college is worth it?


In her book, Koblinger emphasises the fact that opportunities to talk to kids about money happen naturally as we go about our daily lives. Parents can take advantage of these “teachable moments” when they arise to help their kids begin building the foundation for a lifetime of financial success.


Researchers from the University of Minnesota suggest focusing “children’s education about money on the concepts of earning, spending, saving, borrowing, and sharing.” In her paper “Practice Makes Perfect: Experiential Learning as a Method of Financial Socialization,” University of Arizona doctoral student Ashley LeBaron explores the effectiveness of hands-on learning opportunities for teaching children about money. LeBaron concludes that parents should teach their children about money through example, explanation and applied practice.

“I think it’s hard for parents, sometimes, to let their kids make mistakes,” LeBaron said. “It’s tempting to just shield kids from everything related to money, but it’s really important for parents to get money into kids’ hands early on so they can practice working for it, managing it and learning how to spend it wisely.”


Preschool and Kindergarten: Ages 3 to 5

Children as young as 3 years old understand basic economic concepts, and by age 7, kids have developed permanent financial habits. This is a good time to start explaining that material goods cost money. Give them a piggy bank, or better yet, help them establish spending and sharing jars, which will allow them to see what happens to their balance depending on the decisions they make. Talk to your preschooler or kindergartener about sharing with others. Show them how to set financial goals and how to meet those goals. And remember, parents have the greatest influence over children’s money habits, and at this age, your kids are looking to you to set an example and guide them.


Elementary School and Middle School: Ages 6 to 14

At this age, you can let your child help with the grocery shopping, walking them through your decisions to shop at certain stores, seek coupons and sales, and select certain brands according to pricing and your budget. You should also begin discussing big-ticket items with them. Koblinger included an example of how a friend of hers used car shopping as an opportunity to teach his 10-year-old “smart ways to save, how to see through clever marketing, how to negotiate prices, and how to avoid the pitfalls of loans.” You can even teach children this age about compound interest, using real data as opposed to trying to explain the concept in the abstract.


Checklist for Parents


  • Do each of my children have some money to manage without my interference?

  • Have I helped my children set up a spending and saving plan?

  • Do I avoid using money as a reward or punishment?

  • Do each of my children do some regular household chores?

  • Do I set a good example by being truthful about money matters?

  • Do I give my children more financial responsibilities as they get older?

  • Am I a good money manager, giving my children a good example to follow?

  • Do I allow my children to make their own decisions about money when there are alternatives?

  • Do I praise my children if they have made wise decisions with their money?

  • Do I help my children find ways to earn extra money that is age appropriate and suits their abilities and skills?

  • Do I allow my children to make mistakes related to money and help them to understand the consequences?

  • Do I sometimes verbalise my own desire to acquire more goods and services than my income can handle so that my children know that I say "no" to myself, too?




 young child holding a pink piggy bank



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