In a world where financial decisions shape the course of our lives, the importance of instilling sound financial habits in our children cannot be overstated. Yet, in spite of all the lessons we strive to impart upon them, the topic of money too often remains neglected, relegated to adulthood's distant responsibilities.

Here, we break down some simple strategies to empower your children to handle financial issues with confidence. These tips are suitable for different age groups, from little ones just starting to grasp the concept of money to older kids ready to dive into budgeting and saving.

Ages 5-7: Lay the Foundation

  • Start with the basics: Introduce the concept of money by showing them different coins and bills. Teach them the names and values of each.

  • Make it fun: Use games and activities to teach simple money concepts. Play pretend store or set up a lemonade stand to introduce the idea of earning money.

"My daughter is 6. When she gets a big bill (like a $20) and she wants to get something, we play/try to understand what she should get back as change and how money/bills work. I also tell her all the time that money comes from hard work and that mom and dad need to spend "time" working in order to get money. So when she asks for things, she knows that it means mom and dad are going to have less time." Jero P.

  • Teach saving: Encourage them to save a portion of their allowance or any money they receive as gifts. Use clear jars or piggy banks so they can see their savings grow.

  • Lead by example: Let them observe you making purchases and explain your decisions. Show them how to differentiate between needs and wants.

Ages 8-10: Introduce Budgeting

  • Give them responsibility: Start giving them a small allowance and encourage them to budget it. Help them create simple budgets for spending, saving and sharing (donating).

  • Teach opportunity cost: Help them understand that choosing to spend money on one thing means giving up the opportunity to buy something else. This can be done through real-life examples or simple scenarios.

Giving an allowance to my son was not only a way to teach him about finances but also a way to share my values with him. Supporting nonprofit organizations and giving to our church is important to me, so I told Lawrence that when thinking about his money, he needed to think not only about things he wanted to buy but also about something he wanted to save for and organizations or causes he wanted to give to.“ Angie W.

  • Set savings goals: Guide them in setting achievable savings goals, whether it's for a new toy or a special outing. Help them track their progress towards these goals.

  • Introduce the concept of earning: Encourage them to take on extra chores or tasks to earn money beyond their allowance. This teaches them the value of hard work and earning money.


Ages 11-13: Expand Their Understanding

  • Teach them about interest: Introduce the concept of interest by explaining how savings accounts work. Help them see how their money can grow over time through compound interest.

  • Involve them in family finances: Discuss family budgeting and financial decisions with them. Let them see how you prioritize spending and saving as a family.

"I have given my sons a "greenlight" card. They can spend and save there; it is a mix of a bank account and a credit card on their phone. We transfer money via mobile, and they can use it. I am always trying to explain that life is hard and they need to start saving early. Not sure if they listen." Yvette J.

  • Introduce investing: Keep it simple by explaining the concept of investing in stocks or bonds. Use age-appropriate resources and examples to help them grasp the idea.

  • Encourage entrepreneurship: Support any entrepreneurial endeavors they show interest in, whether it's starting a small business or selling crafts online.

Ages 14-17: Prepare for Independence

  • Open a bank account: Help them open their own bank account and teach them how to manage it. Show them how to monitor their balance, deposit money and write checks.

"When our son became a teen, we took him to the bank, and he opened up a checking account and savings account. The bank offered a teen account that allowed me access so that I could monitor his purchases and add money to his account from mine." Bridget & Reggie T.

  • Teach them about credit: Explain the concept of credit cards and loans, including how interest works and the importance of responsible borrowing.

  • Emphasize long-term goals: Discuss the importance of saving for big purchases, college or retirement. Help them create a plan to achieve these goals.

  • Encourage part-time work: Support their efforts to find part-time jobs or internships. This gives them real-world experience managing money and understanding the value of work.

  • Foster financial independence: Gradually give them more responsibility for their finances and let them make their own spending and saving decisions. Offer guidance when needed, but allow them to learn from their mistakes.

By teaching children about money from a young age and adjusting the lessons as they grow, parents can help set them up for a lifetime of financial success. Start as early as possible, be patient and lead by example to instill good money habits that will last a lifetime.