If you want your child to grow into a financially responsible adult, the best thing to do is to model good financial decision-making at home and discuss money and finances honestly — even if it means you’re learning about money and creating new habits along with your child.
But what is age appropriate? Start early, build on lessons learned and stay consistent. Read on for some age-specific guidance.
Toddlers
Though very young children cannot grasp the concept of money, they can begin learning financial terminology. Teach your child to identify various denominations and items like your checkbook and wallet. Play store. Take him or her to the bank to meet the tellers and see you deposit and withdraw money. Tell stories.
Preschool and pre-K
Allow your child to participate in planning, saving and transactions in small ways. Children ages four to five can help you write grocery lists, clip coupons and hand money to cashiers. Continue money-based play at home so counting becomes second nature.
Start teaching him or her about wants vs. needs. Start asking your child what he or she wants to be as a grown up and why.
Early elementary school
Open a bank account for your child so that he or she has a place to deposit any earnings or gifts.
Many experts agree this is a good age to begin an allowance, though there is disagreement about the best reason a child should be told he or she is getting the allowance. For example, should your child get a flat amount or should it be chore-based? Alternatively, should chores be unpaid and extra help be paid? If you decide to pay an allowance, decide what will work best for your finances and your child.
Late elementary school and middle school
Pre-teen and early teen years are when children tend to want and require more money than before. With school supplies, hobbies and clothing for special activities (like school dances or field trips), these years provide a great opportunity to show your son or daughter how to make a budget — or to learn how to make budgets together. Continuing conversations about wants vs. needs can benefit everyone as peer pressure mounts. Combined, these same conversations can create a natural transition to explaining the household budget to your child, which can help him or her understand the reasons behind your financial decisions.
However, experts agree that you should not disclose your salary to your child until he or she is mature enough to understand some information is private and not to be discussed outside of the family.
Continue asking about your child’s intended career and encourage him or her to learn more about it. Make charitable giving a part of your financial discussions and planning.
High school
Encourage your teenager to find ways, even small ones, to make his or her own money; babysitting, helping neighbors, mowing lawns and life-guarding are just a few to consider. The high school years are also a great time to introduce an appropriately mature child to paying by credit, debit or stored value card.
If your child is interested in post-secondary education (college, junior college or a vocational or technical school), talk to him or her early and often about the costs, what financial support you are willing to provide, financing options and the long-term effects of debt. Have him or her research, including the best school for his or her intended vocation, the average salaries for recent graduates just starting in that intended field and whether or not it’s a growing or dying trade or occupation.
When your child has an idea about post-graduate job prospects and the debt load after graduation, he or she will be able to make more informed decisions — and will likely feel more ownership of his or her decisions.
And that final lesson is a good lesson for everyone: Knowledge is power. Don’t let your own lack of knowledge keep you from having these discussions. View wanting to raise your child to be financially knowledgeable as the best reason and time to learn more about financial topics. You will empower both your child and yourself at the same time.
