PARENTING
06/20/2017 11:06 am ET

How To Teach Your Kids About Money

An age-by-age guide to raising financially savvy children.
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Your kids will go to school and gain a wealth of knowledge in science, English, math, and other classes. But they won’t learn about money.

While financial literacy should be taught in schools just like any other subject, most schools don’t make it required curriculum. It’s up to parents and families to teach kids about money in all its forms at an early age. Unfortunately, parents tend to barely know the basics. Sure, saving and budgeting look easy, but what about investing, building credit, and saving for retirement?

Here’s an easy breakdown by age so you can teach your kids about money right now.

Preschool

  • Show your little one coins and dollars and start basic math, like how four quarters equals a dollar.
  • Get them a piggy bank or jar to collect coins so they can count their money on their own.
  • Play money-related games where they can pretend to spend their own money to see what buying things looks like.
  • Either give them small chores around the house to start earning a little bit of money or put your leftover change in their coin jar so they can see their money increase.

Elementary School

  • If you haven’t already, establish an allowance, whether it’s tied to household chores or not. The purpose is to teach money management, so let them earn dollars the best way you see fit.
  • Give them the opportunity to spend their money how they want to teach them mistakes early. For example, if they want a toy at the store and have their money to spend, let them buy it. If the toy breaks or they want something else and don’t have the money, show them they can’t afford it. Don’t buy it for them.
  • For older elementary-aged children, show them where money comes from, like ATMs, and how credit and debit cards work like money.
  • Let them get comfortable handling money. If you head to the bank, take them with you and let them count the cash.
  • Go over expenses, like the monthly costs of water, electric, phones, and even rent or mortgages.
  • Start to explain how you earn money, how the family pays bills, and what you do if and when money is left over (like savings for a vacation, college fund, or retirement).

Middle School

  • Explain how to make smart money decisions and what investing and savings are.
  • Increase allowances with age. Remember not to bail them out when they make a poor money decision. Let them learn from their mistakes.
  • Describe your past mistakes so they can learn from those. It’s important for your children to know you’ve made money missteps, too.
  • Take them to open a bank account. Show them how they can take money out, go over statements and what happens if they overdraft. Offer to match their savings each time they contribute to it.

High School

  • Encourage them to get a job, giving them the opportunity to earn money outside of the home. Show them how to put their checks in the bank.
  • Put investing into practice. Show them stocks, bonds, and mutual funds. Let them pick out short and long-term investments, even if they aren’t ones you would consider. Discuss risk and reward.
  • Consider other investing, too, like saving for a phone, car, college, or other major expenses.
  • Think about getting your child a secured credit card. Show them how to pay off bills in full. Establish credit now, monitoring their credit score and history with them.
  • Start to discuss short- and long-term loans, including student loans. Explain what debt is.

College

  • Encourage your adult child to get a regular credit card. You can monitor their account activity at your discretion, but try to let them make their own decisions at this point.
  • Help them create their own budget. Go over their weekly, monthly, and yearly financial responsibilities for school. If living off-campus, detail rent and utility costs.
  • Make sure they keep up with long-term savings and retirement contributions. Show them why APYs matter. Detail what CDs and IRAs are.
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