It’s time to have “the talk” with your children, but this time, it’s about money. Here’s our age-by-age guide to teaching your little ones about finance.
Age 3: Delay Gratification
Activity: Tell your little one that you’ll give him a piece of chocolate now, but you’ll give him two pieces if he waits thirty minutes. Let him decide on his own but encourage him to wait for the extra piece of chocolate.
Lesson: Although waiting, like saving, isn’t always fun, it pays off in the long run. Furthermore, as demonstrated by the famous marshmallow test, children who learn to defer gratification are far more successful at making smarter decisions, especially financial ones, as adults.
Age 4: Introduce Coins
Activity: Treat your preschooler to an afternoon at the park. When you pass a fountain, ask your kid if he’d like to throw a penny in to make a wish. Give him a handful of coins, and have him identify the pennies. For more coin-based children’s lesson plans, check out http://www.usmint.gov.
Lesson: Money is something you exchange for something else, and each type of currency has its own unique worth.
Age 5: Say, “No!” (Sometimes)
Activity: Next time your child sees two things he wants at the store, remind him that you can’t buy everything you want, and let him choose the object that’s most important to him. Children need opportunities to make limited choices.
Lesson: Financial resources are limited, so you can’t always get what you want.
Age 6: Give An Allowance
Activity: Depending on your financial circumstances, consider giving your kid a weekly allowance. This allowance should not be tied to household chores he should be doing anyway; instead, it’s a way to teach your child about managing money.
Lesson: If you want to buy something, start saving.
Age 7: Discuss Careers
Activity: Ask your little one what he wants to be when he grows up, and have him to draw a picture of his dream job. Do this exercise alongside him, drawing a picture of your job. Explain what you do at work and why you chose your career. Check out this A-Z job list for additional ideas!
Lesson: Sure, you work to make money, but you should also pick a job based on your interests.
Age 8: Pay Bills Together (Kind Of)
Activity: Invite your kid to sit next to you while paying the bills, even if this means occupying him with a coloring book (Side note: coloring books are actually good for you!).
Lesson: Being a responsible adult means paying bills, and on time.
Age 9: Open A Savings Account
Activity: Open a savings account for your child. Don’t let him withdraw money from it, but encourage him to make deposits by offering to match every dollar he contributes.
Lesson: It’s fun to save money!
Age 10: Let Your Little One Swipe Your Card
Activity: At the supermarket, let him swipe your credit card for you. Say something like, “Swiping this credit card equals borrowing money. If I don’t pay it back on time, they’ll charge me lots of money, but I’m never, ever late!”
Lesson: Using credit means borrowing money to buy something. Parents, here’s another resource for explaining credit to your little one.
Age 11: Investigate Advertisements
Activity: While watching TV with your child, remind him that advertisers pay lots of money for commercials to make their products seem cool.
Lesson: Commercials might be entertaining, but their purpose is to take your money.
Age 12: Demonstrate Smart Purchases
Activity: Invite your middle schooler to run errands with you. At the store, explain how you evaluate the quality of an item and when you choose the more expensive option over the cheaper one.
Lesson: It’s OK to spend more on something, as long as you have a specific reason for doing so.
Age 13: Go Over The Basics Of The Stock Market
Activity: Show your teenager a historical graph of the S&P 500. Explain that despite regular ups and downs in the market, investing in U.S. stocks has consistently earned people more money over the long term.
Lesson: By investing some of your savings in the stock market, you’ll have a lot more money for things down the road, like retirement.
Age 14: Encourage Hard Work
Activity: Whether it’s by taking care of neighbors’ pets, watering plants, or babysitting, encourage your kid to make his own money and feel the power that’s associated with spending it however he wants. If your teen wants to buy a $50 hoodie, explain that he’ll have to mow the lawn for 5 hours at $10 per hour in order to afford it.
Lesson: When you make your own money, you have a lot more options.
Age 15: Open A Checking Account
Activity: As soon as you think your child will be able to handle it, open a checking account for him. Even though you’ll probably have to cosign, let him know that he’ll suffer his own consequences if he overspends.
Lesson: Just because you have access to the money in your account doesn’t mean you should spend it.
Age 16: Help Find Balance
Activity: Junior year of high school is notorious for being stressful. If you suspect your kid is overwhelmed with balancing balance school, work, and personal activities, set aside an afternoon to go over his schedule (preferably over warm cookies!). Decide whether his schedule is healthy, and discuss ways to handle stress.
Lesson: Money is great, but it’s not everything.
Age 17: Explain Credit Scores
Activity: Spend some time with your teen looking up his credit score online. If he doesn’t have any credit yet, feel free to look up your own score. Make sure he understands why it’s important to keep his credit score high and how he can do so by paying every bill on time.
Lesson: Your credit score is important, so make sure to keep an eye on it.
Age 18: Explore Student Loans
Activity: Before your child (who’s now an adult!) heads off to college, pick a time to go over student loans together. Decide who’s responsible for taking on this financial burden, and make sure your young adult understands the terms before signing any loan. Come up with a game plan for saving money during school and repaying loans after graduation.
Lesson: College is a big educational, but also financial, commitment.
As a parent, you’re the best person to know when and how to educate your child about money. For more money resources for kids, check out https://kids.usa.gov.