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Teaching kids about money

Did you know that at least one study suggests that kids’ money habits are formed by age 7?

Yikes! I better get on my game.

No matter the age, experts offer several suggestions for helping kids learn about and be responsible with money.

Age 2 & 3 – Introduction to money

Pretend Play – Preschoolers aren’t quite old enough to learn important lessons about money, but they can begin to become familiar with money by playing store, imaginary restaurant, and learning the names of coins. (Careful, though – some young kids will swallow those pennies!)

Ages 4 – 8 – Learning to wait

Clip Coupons – If you like to clip coupons, have your child help you cut them out. Chat with them about what you’re doing and why, and then take them shopping to get some discounts.

Start giving allowance – Giving allowance is an educational opportunity for kids to start learning about making choices with money. (Most experts agree you can start around kindergarten if you’d like.)

However, Dave Ramsey stresses that kids should not be given money for nothing. Rather, parents should give allowance based on extra chores they do around the house. This will help them understand that money is earned, not just given.

Just google “age-appropriate chores,” and you’ll find lots of ideas for how to encourage your kids to help out around the house.

Create allowance jars: Forbes Magazine suggests creating three jars labeled “Saving,” “Spending” or “Sharing.” Many experts recommend these jars be clear so your child can see the amount growing.

Every time your child receives money – from allowance or a gift, divide the money equally among the jars.

Use the spending jar for small purchases like snacks or gum. For the sharing jar, help your child choose a good cause to give to. This could be a charity, a friend in need, or maybe a religious institution. The saving jar should be for more expensive items, such as toys they’d like to save up for.

Each time you add to these jars, talk to your child about how much is in the jar, how much they still need to reach their goal, etc.

Set a goal – Now is a great time to assist your child with goal-setting. Forbes Magazine also recommends helping your child set a reachable goal, such as to buy a special toy. Set them up for success. The idea is to give them the experience of saving, and practicing waiting for something good. When you do finally reach your goal, let your child pay the cashier and take ownership of the process.

Teach them to wait – All of these practices emphasize the importance of learning to wait for things, save when necessary, and avoid splurging. When you go to stores, set the expectation of what you will and will not be purchasing that day, and stick to it.

Age 9-12 – Making decisions

Open a savings account. – As your child gets older, consider opening a bank account and begin to explain interest to them. See if your bank has a special no-fee and no minimum balance account for children.

Include your child in some financial decisions. – Obviously your child shouldn’t be in on the very grown-up financial discussions that take place in your home. However, discuss with them why you choose generic brands or name brands, talk about finding deals, and discuss why you might buy some items in bulk.

You might even run experiments with them by buying generic items and then brand name items, and deciding if the brand name was worth the extra cost.

You can also discuss opportunity cost by explaining that if they buy a certain item, they may not have money to buy something else they want.

Point out sales tricks. – Now is a good time to begin point out to your child some of the strategies that advertisers use to sell to us. For example, point out that even though commercials make it look like you’ll have more friends or be happier with a certain product, we know that isn’t always true.

Sell lemonade. – If your child seems interested, encourage them to run a lemonade stand or yard sale. There’s no better way to learn about money than in a real world setting like this.


Teach them about credit cards. – I remember arriving to UW-Madison like it was yesterday. That first week of school, it seemed like there was a credit card being offered to me at every corner. Now is the time to teach them how credit cards works, and how and why they should avoid debt.

What tips and tricks do you have for teaching kids about money? Share in the comments below!

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