Learning Center

Teach Your Children about Money

The sooner your children learn how money works, the better they’ll do financially.

mature couple discussing finances

If you’ve ever said to your children, “money doesn’t grow on trees,” it might be time to start teaching them how it works – and how they can become smart consumers.

Here are some suggestions for getting started.

Grade school:

  • An allowance is a great teaching tool. Giving your children small amounts of money helps them develop an understanding of saving and spending. Decide if an allowance is payment for work done around the house or given as spending money. If it’s payment for work, spell out your expectations of what you want done.
  • Teach your children to look beyond what they can buy now. Encourage them to look at a larger purchase like a bicycle or a video game they have to save for.
  • Take time to research stores and websites to find the best prices. Since it’s hard for children to save (it doesn’t give them immediate gratification), celebrate your child’s achievement of saving to reach a goal.
  • Turn everyday activities into teachable moments. A trip to the grocery story is a good time to explain price comparison and value.

Middle school:

  • Introduce the concept of debt and credit. If your child wants to buy something they don’t have enough money for, offer to loan them the money and set up a repayment plan.
  • Encourage your child to set a goal for saving – maybe for a new toy or game.
  • Try teaching with a three-jar system. When your child receives an allowance, birthday money or other income, have them to put their earnings into jars labeled “Spend,” “Save” and “Donate.” This will teach them that money isn’t just for spending – saving and charitable giving are important, too.

High school:

  • Teaching high-schoolers about checking accounts, credit cards and debt will make them more financially savvy when they leave the nest.
  • This is a great opportunity for them to learn that time equals money. When your teenager buys something, they’ll learn that the true cost is the hours worked to get the money to make the purchase. If they worked 10 hours for the money to buy something, is the “thing” worth 10 hours of their time?
  • Explain insurance with teens, especially as they learn to drive.
  • Have your teenager open a checking and savings account. They’ll learn about fees, account maintenance and earning interest. Many banks and credit unions have special savings and checking accounts for young customers.
  • Don't always be a lifeline. If your child makes a bad purchase, it’s a relatively painless way to learn better money management skills.

College:

  • Start teaching real-world lessons about saving for retirement, and managing health care costs, pensions and Social Security benefits.
  • Compound interest might be the topic of an economics class, but this subject is best learned in the real world. Teach your children about investing and retirement savings. The sooner they start saving for retirement, the more they'll benefit from compounding returns.
  • Teach basic investing. When the balance in a savings account reaches a certain level, it might be time to invest a portion in a higher-earning account.

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