Teaching kids about money

Want to give your child a head start with financial literacy? Start by teaching your kids about money, which you can start at an early age. Choose activities that are age-appropriate and keep the learning going through every stage of their childhood. The more you engage, the more prepared they will be to manage their finances independently. Building a solid foundation early will help ready them for a successful financial future.

How toddlers and preschoolers learn about money (ages 2-6)

Young kids are curious and eager to learn as everything is new and exciting. They begin to understand the concept of money from a very young age. For children between the ages of two and six, the key is to make the lessons engaging and interactive. Here are some ideas.

• Play a sorting game with coins and bills: Very young children are likely to be fascinated by shiny nickels, dimes and quarters. Introduce change to your toddler or preschooler and show them how it works. For example, take two dimes and a nickel, and then show them how they all add up to a quarter.
• Set up a play store: Play pretend with your child and create a store at home with items for sale. Simply apply stickers with colors or objects that represent a "price" on some of your child's toys, and then "shop together" and check out at a toy cash register.
• Gift them a piggy bank: Remember those dimes and quarters from the sorting game? Help your child put loose change into to a piggy bank for an early introduction to saving money.
• Read books about math: Introduce books and stories that incorporate simple numeracy concepts like counting, shapes, and patterns. Reading these books together can make learning fun and engaging for your toddler or preschooler while enjoying quality time with you.

How school age kids learn about money (ages 7-12)

As your children head to elementary school, continue the financial literacy lessons at home. Remember to keep things fun and engaging so your kids are more likely to participate.

• Play a guessing game: Next time you go to the store or venture out for a family dinner, play a game to estimate how much certain items might cost. This is a great time to introduce the idea of sales tax and tips, which add on to the bill's total.
• Consider paying for above-and-beyond chores: If they're not already aware, teach your children how adults work for money. Explain that they can also earn money by completing age-appropriate chores. For example, offer $5 if they help you wash your car one weekend or $4 for vacuuming the living room. You may also want to provide them an hourly rate, such as $5, and have them keep track of how long they spend on a delegated task.
• Create savings goals: By elementary age, your child may be receiving money beyond their allowance, such as birthday cash or monetary presents from grandparents. Continue to emphasize the value of saving money by creating a goal together, such as the eventual purchase of a new bike.
• Make it real: Turn a regular grocery run into a learning opportunity by teaching your child the value of a dollar. For example, tell them you have a specific dollar amount to spend and that they can choose one of their favorite foods. Wander the aisles together and look at the cost of their selected items. Discuss how many they can get for your budget.
• Visit the bank together: Show your child that the bank is more than just a place to get free lollipops. Open an account for them and explain how it's similar to their piggy bank, but the bank also gives them a little extra money the longer they keep their cash in their account.
• Help them decide how to spend their allowance: While getting into the habit of saving is great, give your child the freedom to spend some of their savings. Talk about the different values of purchases — a bag of candy will be gone in a flash, while a new toy or book will last much longer.

How teens learn about money (ages 13-18 and up)

With your child's increasing independence, now is the perfect time to make sure they've understood the financial literacy lessons you've taught them, while also introducing new concepts.

• Talk about needs vs. wants: As your child heads to high school, consider giving them more financial responsibility by allowing them to use their own money to buy items they want, like a video game or new clothes. Talk to them about the difference between wants and needs to help them understand concepts like needing better-fitting sneakers versus wanting a specific brand.
• Encourage your teen to get a part-time job: Whether it's during the summer or on the weekends during the school year, you can encourage your teen to find a job outside of the house. This allows them the excitement of receiving paychecks and dipping their toes into the waters of the working world.
• Ask your teen to contribute to big-ticket items: Whether it's with their allowance or earnings from a part-time job, consider having them contribute to big ticket purchases, such as college tuition or car payments.
• Create a budget: Help your teen develop a budget that lets them spend on their wants, have enough for their needs and save for their future. Introduce them to budgeting software that can track their spending and income.
• Introduce them to more complicated financial concepts: Help your child master the concept of compound interest with the savings account they've had since they were young. You can take it a step further and introduce them to investing in the stock market. If they have a part-time job, it's also a good idea to educate them on taxes.
• Talk about credit and debt: If your child is heading off to college, student loans may be at the front of their (and your) mind. They may also start to receive credit card offers once they turn 18. Now is the perfect time to talk to them about building a strong credit history and monitoring their borrowing.
• Open their first checking account: Citizens has checking accounts available for teenagers from age 14, giving them access to a debit card for spending. Talk to them about the difference between checking and saving accounts and why they want both. If your child has a smartphone, show them how to download a mobile banking app to keep tabs on their money anytime and anyplace.
• Keep the lines of communication open: As your child heads into the world, remind them that you're just a text message, phone call or DM away and that they can come to you for advice or questions about money.

Teaching kids about money

Teaching your child about budgeting, saving and making smart financial moves equips them with not only the necessary life skills but also fosters invaluable confidence for effective money management. A solid financial foundation will help them avoid excessive debt and reduce money stress well into adulthood. It's never too early to start money talks with your children and lay the groundwork for a strong financial future.