At What Age Should You Teach Kids About Money?

Unfortunately, the question of when to teach kids about money doesn’t have one set answer. It is very similar to the subject of kids allowance, in that there are a few variables which parents must consider. The answer can change depending on the situation, parent’s values, and the kids’ level of maturity.

When Should You Teach Kids About Money?

Honestly, the answer to this question is very simple…As soon as they are old enough to desire things, and they can understand basic communication! Since all kids are different, it would be unwise to attach an age to a particular financial lesson.

As you can probably tell, I don’t think that age should be an important factor when trying to decide when to teach kids about money. Instead, you should start teaching them whenever you begin to teach them about other basic concepts! Here are a few things to consider when you begin your lessons:

The Maturity Level Of Your Child

If your child is still at the stage where they are interested in nothing but playing simple games, and staring and shiny, moving objects, then you might want to hold off on teaching them about options trading! However, this doesn’t mean that you can’t begin teaching your kids about money. You can incorporate very basic financial concepts into their play – just like most parents do with language and math!

Early on, you can simply teach them about physical currency – maybe even using some of your damaged money for them to play with – so they can understand that a “trade” needs to take place when you buy something.

What this does is let them know that you don’t just walk into a store a take whatever clothing, food, toys, etc that you wish! You can explain to them in a very general way that you have to work for those things. This can also help to explain why one (or both) of you leave them for much of the day!

When you are teaching them that they can’t always get what they want, you can incorporate a financial lesson into that as well. The key is to use everyday events/topics to demonstrate basic concepts about money, and teach them your financial values!

If your child is more mature, and they are at a stage where you can teach them – without always using illustrations – then you can move forward with lessons that involve more depth. Make sure that they can see how you handle your finances, and take the time to explain to them why you make certain decisions. If you give your child(ren) an allowance or pay them for completing certain tasks, then you can help them to manage their money properly.

Many parents do this by establishing different “accounts” (nothing more than separate jars or piggy banks), and designating each one for a different purpose. You may have them put a certain amount aside for giving to your church (or helping others in general), one for savings (saving early in life is extremely important), and another for spending (allow them to make a few bad choices in their spending).

Of course, depending on the maturity and mindset of your child, you can make this system and simple or elaborate as needed.

Your Family Experiences

While I feel that you should teach your children about all aspects of money management, how those lessons are applied will be largely based on your own family experiences! If you are struggling with student loan repayments, or trying hard to pay off debt in another form, then you can use those experiences to teach your children about living above their means!

When these things become apparent in your child’s life, use them as a way to teach them about finances! Maybe they begin to ask questions about some of your financial decisions (such as not buying something for which you previously expressed a strong desire), or they simply ask you what you are doing while you’re reconciling your bank account.

Also, keep in mind that if you are affluent, you may have to fight against other risks – of course, these all depend on how you raise your children, but it’s still good to be on guard!

Addressing Their Questions

Pay attention to the questions that your child may ask. If they are asking a sensible question about something they observe or heard you say, use that as an opportunity to teach them. The next time you wine about tax preparation, they may ask you why we have to pay taxes; instead of giving them a silly answer (i.e. “because the government likes to rip us off”), you can explain to them about all of the services that the government provides, and let them know that it takes money to run them. Again, you have to gauge your answer on their level of interest and understanding of these things.

The next time they ask for something, you can let them know how much work it takes to buy what they want. If you’d have to work for 3 days (after taxes) to be able to afford the new video game system or cell phone that they are , then use that moment to teach them about the relationship between hard work and money.

The Bottom Line

With children (and adults as well), it is nearly impossible to assign particular tasks or levels of understanding to a certain age. Therefore, it is extremely important for each parent to observe their children and determine the right time to talk about different financial concepts.

Talk to your child early and often about money matters, and if you see that it’s over their head, see if you can incorporate it into a game, song, or break the concept up into bite-size pieces!

photo by MIKI Yoshihito

Reader Questions

When did you first learn about money? Who gave you those lessons?

Did you learn more by watching your parents handle money, or by them sitting you down and teaching you concepts?

If you are a parent, when did/will you teach your kids about money?

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14 comments

  1. scott toney says:

    some top of the line advice…i wish more young parents would read and incorporate this in to their kids…the young parents of today are lost because theirs gave them what they wanted…but real good advice

  2. krantcents says:

    I was exposed to my parent’s businesses at a very early age. I think exposure to what you do with money is an invaluable lesson. Secondly, it is equally important how you solve problems. Children learn from seeing what you do more than you teaching them. Modeling the responsible financial behavior is the best lessons for your kids.

  3. Health Forum says:

    I think you should start teaching you kids about money as soon as they start asking for some.

  4. Crystal @ Personal Loan Comparison says:

    The first money lesson I learned that I remember is how easy it is to lose 50 pennies when playing my uncle in penny poker when I was 5. Believe it or not, it taught me how much I don’t like parting with money. Other than that, I learned about money while watching my parents and grandparents deal with it.

  5. Dave says:

    Before I was five years old, my parents opened a savings account for me where we deposited gifts of money given to me for my birthday or at Christmas. It wasn’t much, but I was amazed that the bank kept adding more to it (in the form of interest) without me having to do anything! That experience, along with not being able to have everything I wanted, were the two most important “money” lessons my parents taught me when I was young.

  6. Brave New Life says:

    My son is 3 and a half, and we’ve just started teaching him that money is required in order to buy things. We stumbled into it because he was playing an online game on the computer before bedtime and somehow ended up looking at toy cranes on Amazon. I had to explain why we wouldn’t be buying one.

  7. Brave New Life says:

    My son is 3 and a half, and we’ve just started teaching him that money is required in order to buy things. We stumbled into it because he was playing an online game on the computer before bedtime and somehow ended up looking at toy cranes on Amazon. I had to explain why we wouldn’t be buying one.

  8. KDB says:

    I agree completely. Learning about money is best when it occurs when money is spent or saved. You can talk about money all you want, but showing kids how to spend and save responsibly is even more important.

  9. My University Money says:

    I think that one of the biggest things parents can do is to make kids work for an allowance. As a child I used to get upset with my parents because other kids just got money every week. My parents had an outline of the chores I had to do in order to receive my allowance. This lesson helped prepare me for life and taught me the value of a dollar, so it made it easier to become a “saver” instead of a “spender.” One area where my parents couldn’t help me (they never learned this themselves) is how money is really just a tool. The whole idea of investing, or using your money to gain more of it in the most efficient ways possible was pretty foreign. At what age would most of you begin to explain this side of finance? I know one thing, parents have to take a leading role in explaining financial literacy because our schools won’t do it (check out my most recent post for more on that sad story).

  10. Marie at FamilyMoneyValues says:

    My parents taught me that you can earn money through an allowance and by coming up with a money making ‘business’ (selling plums from our tree). They showed me how to save, stay out of debt and use credit wisely (and to invest) only by example…no special instruction given. We did the same with our boys – but I want to do more with my grandkids. That is why I have started a tradition of having a week long ‘Grandma’s Money Camp’ each year with them. We all need to do a better job of teaching our families personal finance.

  11. shanendoah says:

    I had an allowance that I had to earn- or really, we had a chore list and how much the chores were worth. We could choose how much money we wanted to earn. When I was old enough to babysit, I always had to put 1/2 of my earnings in to savings. After my parents divorced, my mom and I lived in low income housing, and I understood that money was tight and that I shouldn’t ask for anything (like concert tickets) if I didn’t have a way to pay for them myself. Given all of that, I would still say I didn’t really learn about money until I was in college, on my own, and made some mistakes – not balancing my checkbook, not double checking to make sure the rent check had been cashed, forgetting to pay the credit card- all sorts of stupid money moves. I was a good student, working, and paying my own bills. But I still messed up, more than once. I really did have to figure it out on my own. And I’d still say we don’t always make the best money decisions, though we’re getting better every day. That’s not to say that I discourage parents from teaching their kids. Heck, I have a budget date with my 19y/o cousin sometime in the next couple of weeks before she goes back to school, ot help her understand what her $ options are for the next school year and to hopefully help her not make the mistakes I did. But sometimes, no matter what parents/family does is enough. Sometimes, we have to make our own mistakes in order to learn.

  12. Beating Broke says:

    I think that the earlier the better, but, yes, you’ve got to take into account their maturity level. It doesn’t do much good if they don’t understand the concepts. Simple savings rituals can be extremely powerful early on. Our son has a little treasure box that has quarters in it. Just the other day, his sister dropped it and all the quarters fell out. He ran over and started putting them back, and told his sister that they had to pick them up so they could go to sunday school church. You see, we use those quarters for his sunday school tithing… ;)

  13. Tracy says:

    I agree that you should begin teaching them at an early age. Kids understand a lot more than we give them credit for. I also believe that unless you model the behavior you are teaching, they will not do what you say, but what you do. My parents taught me a lot about life skills, but they also lived outside their means. I have spent many years in my adult life working hard at multiple jobs to get myself back out of debt. Fortunately, the third time has been the charm for me. No more credit cards for me. Now it is save, give and then spend.

  14. Jamie @ Susies-Coupons.com says:

    We have always tried to teach the kids about money by simply demonstrating and helping them to understand how things cost. These are simple things like asking them to estimate the cost of groceries as we’re standing at the checkout, helping them understand things like daily expenses, etc. (And we play a lot of Monopoly.) :) Now that they are getting a little older (8, 10, and 12), we also find ourselves engaged in a lot of discussion about ways they can earn money. Kids have such creative ideas for entrepreneurship and we’re really trying to foster that.

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