Managing money is an essential skill that people use throughout their daily lives. However, few children receive any financial literacy classes in school, the Financial Educators Council says. So, it’s up to parents to help their kids learn about money.
According to the Teens & Personal Finance Survey conducted by Junior Achievement USA and The Allstate Foundation, kids want to learn money management. 84% of teens said they wanted information from their parents on handling money, but one-third of parents say they don’t discuss money with their kids.
You don’t have to wait until your kids are teens to teach them about money. It’s best to start with simple concepts when they’re preschoolers and gradually increase the money decisions they make. We’ve collected some ideas to help you teach your kids about money, based on their age.
Preschool
- Let your kids see you using cash to buy things and explain that you earn money to buy things the family needs.
- Set up a play store with small toys or other items you have around your house. Put prices on the items. Use real coins or bills and have your kids practice being a shopper and store clerk, counting out money and making change.
Kindergarten-Grade 2
- Discuss the difference between “needs” and “wants” and help your kids distinguish between them. Explain that you have a limited amount of money and you must cover needs before buying wants. At the grocery store, ask them to point out items that are needed, like water and wants, like soft drinks.
- Teach your kids that we work to earn money by paying them for doing chores around the house or yard. Make a list of tasks and how much they deserve for each. More than half of parents responding to a survey by the American Institute of CPAs said their child’s allowance is tied to doing chores.
Grades 3-5
- Help your kids learn the importance of saving as well as spending. If there’s a pricey item they would like to buy, have them set a savings goal. If they get $10 a week in allowance and want to buy a $300 game system, have them figure out how much they can save each week and how long it will take to accumulate enough money. To encourage savings, you can offer a bonus by adding $10 to their account when they reach a milestone like $100.
- Visit your bank or credit union and help your child set up a savings account. Explain how interest can help their money to grow.
- Help your child to prioritize spending. Before going back-to-school shopping, have them create a list of supplies and clothing they’d like, then have them number the items in order of importance.
Middle School
- Some middle-schoolers want to make extra money. Help them come up with money-making ideas, such as walking a neighbor’s dog or organizing a yard sale to clear unused items from your home.
- Help your kids understand the cost of credit and borrowing money. If you get a credit card offer in the mail, show it to your pre-teen and explain what the interest rate and other terms mean. Have them use an online credit card calculator to see that paying the minimum each month can be costly.
High School
- As your teens explore possible careers, have them investigate salaries for their dream job and what they will have to do to achieve that dream. Talk about college expenses, what your family can afford to pay and options for covering the rest of the costs.
- If your teen wants a car, discuss the financial responsibilities. Have your teen research car prices and the cost of insurance and vehicle upkeep. Together, determine who will be responsible for which costs and how your teen will pay those costs.
Every parent wants their children to be responsible with money. The best way to ensure that outcome is to be a good role model and teach your kids about money in fun, age-appropriate ways.
Looking for even more financial literacy support? Check out our Financial Literacy Tips for College Students guide.
Contact Us To Learn More About Our Financial Literacy Programs For Children
When your child is ready for a savings account, open a CU Grow Youth Savings Account at Arizona Central Credit Union. This account, designed for kids up to 12, provides a real passbook for kids to track their savings and prizes for deposits. Call us at (602) 264-6421, toll-free (866) 264-6421 or visit any of our nine local branches to open an account.
