Teaching Your Kids about Money

February 27, 2015

Understanding the value of money and learning the skills to properly manage your finances all starts at an early age, not in adulthood. Early learning centres recommend an age-by-age guide on how to introduce your kids to the concept of money and help set them on the right path for financial success:

Ages 3 to 5

With preschool and kindergarten-aged kids, they can grasp the difference between smart financial decisions and irresponsible habits. Even at this young age, kids are ready to know that money doesn’t grow on trees, every penny spent is a penny that can’t be spent elsewhere, and sometimes you have to wait to purchase things. Rather than immediately buying items and treats while shopping, set your child up with a piggy bank or saving jar. When full enough, you can visit the store to buy a treat or toy. If your child learns to delay gratification, it will pay huge dividends when they reach adulthood.

Your children learn from your habits. If you are constantly spending money frivolously, they grow up assuming that is normal behaviour. As much as possible, early learning centres recommend setting a good example for your young kids, which lets them know money is not mystical and infinite.

Ages 6 to 10

At this age, you can explain your decision-making process when it comes to financial matters. Explain why it make sense to buy items on sale, why bulk items offer better value, or why it is more cost-effective to cook meals at home rather than dining out every night. Let your child get involved and help with comparison shopping or treasure hunting for good deals while clothes shopping.

Early learning centres suggest introducing your child to the world of banking by setting them up with their first savings account. Encourage them and give guidance, but let them learn on their own that if they spend all their money in one shot, it is much harder to save up for exciting new toys or devices.

Ages 11 to 13

Once your child hits this age, they are almost ready to start earning money of their own, or perhaps already make a small income babysitting or raking lawns. Sit down with your kids and try to set long-term goals. Help them put prices in perspective – if they make $5 per lawn, how many lawns would they need to rake to save up for a video game? Would they rather splurge babysitting money on candy and chips or save up for some new clothes?

By this age, they are definitely ready to learn about real finances, like investing in the stock market or planning for retirement. While they may be too young to take it seriously, they can absolutely learn the terms and practice with pretend investments. Kids will be shocked to see how much more their investments can grow if they get an early start.
No matter the age, you can start teaching your kids about money and how to responsibly manage finances. Help set your kids on the right path for adulthood with this age-by-age guide.

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