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
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?