From the first trip to the grocery store with your child to the first mentions of “money doesn’t grow on trees” to prevent any reckless spending, building your child’s relationship with money starts really early. Teaching kids financial responsibility fosters positive habits and much better decisions later in their lives. But many are bound by the same question: what is the right age and approach to teach kids about money? 

Though this can differ for every parent, in this guide, we talk about age-specific, fun ways that you can use to effectively introduce the concept of finances to your child.

First of all, what exactly is the “right age?” 

Many think that starting at the “right age” is the key to starting a child’s financial journey, but in reality, it isn’t. Rather, it becomes about teaching the “right concepts” as they age. 

Furthermore, research by the University of Cambridge in 2013 found that the approach to money and money habits is set by the age of seven. Therefore, starting before that and pushing the kids towards healthy money habits becomes crucial.

What is the Right Approach: An Age-Specific Guide

Ages 6 and under: Toddlers and Preschoolers 

The Goal: Understanding the concept of money + exchange of goods

• Words go a long way: a simple way to start will be using and familiarising your kids with words such as “money”, “goals”, “spend” and “save.” 

• The Penny Trick: As soon as your child learns how to count, you can introduce a fun game of collecting one or two coins in a jar that teaches them that different coins have different values. 

• Leading by Example: Toddlers and young kids also easily pick up habits from their parents. Therefore by constantly saying phrases such as “we love to save” and showing them to save (say, by putting money in a piggy bank) you can make it a common occurrence. 

• Playing Cashier: You can create fake scenarios of supermarkets and show them how the exchange works by giving them a limited amount of tokens for the goods they want. This also sows the seed of the idea that, in reality, it is not “shop all you can.”

• The First Bank Account: It might seem like it’s too early to open an account for your kid. But, 5-6 are probably a good time to also start giving them some money: just a few dollars a week increasing as they age. As they turn 6 or older, you can make a quick trip to the bank and open a savings account, where they can deposit their small allowances and facilitate the habit of saving. All in all, make activities fun and insightful to connect the notion of enjoyment to finances and building healthy money habits. 

Ages 6 – 9: Elementary 

The Goal: Teaching them the concept of earning +  Saving and spending

• “Before you spend, earn”: Teaching your kids the concept of earning will introduce the idea that nothing comes free, and one needs to work to do or own things they desire. You can do this by rewarding them with money in exchange for chores such as walking the dog, dusting, etc. These can increase as they grow older. It is also best to keep these separate from personal responsibilities such as keeping your room clean, so it doesn’t lead to a disruptive mindset. 

• Saving and spending: These hard-worked earnings can be further fostered into the habit of saving, possibly in a piggy bank or their bank account. Since they don’t majorly have expenses to deal with, this can be a good time to encourage this positive habit. 

Ages 9 to 12:Middle School

The Goal: Making Choices + Smart Spending

• Their First Grocery Run: Your kids probably understand the “value” of money by this age. So, instead of going with them to get their favorite chocolate, you can send them a couple of bucks to provoke and evaluate just where they are spending the money and its worth.
• A Decision Taker: During weekly grocery runs, make them a part of your financial decisions. You can send them to buy cereals with a budget where they can evaluate the name brands and the value of each. After these chores, discussing with them to shop under a budget and the concept of “needs and wants” will give them more insight. 
• Getting them aware of deceptive advertising: It also might be interesting to talk to them about advertising and the tricks advertisements use to lure purchases so that they become more aware and smart with what they spend on.

Ages 13 to 18: High Schoolers 

The Goal: Teaching them compounding and financial responsibility 

• Introduction to Investing: In the teen years, it isn’t early to start learning about the stock market and investing. It can be a Sunday activity of picking your kid’s favorite company and analyzing its stock fluctuations for interesting discussions.

• Debit Cards: This also might be the right time to give your kid debit cards. With Milestone, your ultimate starter kit for financial education, you can give your child their first debit card and teach them independence, budgeting, and convenience. 

• The First Taste of College: In college, financial independence can come more naturally as a necessary responsibility than a choice. By setting a budget monthly for other expenses and having an honest conversation about tuition and other college expenses that you are probably paying, you are giving them a real perspective on money and thus, letting them decide their approach to it.

• Charity: By donating a part of their allowance, returns on investments, or other income to charity, you can also make “giving back” to society a part of their mentality. 

The Bottom Line: Perfect Combo of Right Age + Approach Explained

With age, the concepts can become more complex and based on the real world. The key, however, lies in taking a positive and fun approach to initially build up interest and comfort with the concept of finances and incorporating daily activities for habit-building. At the end of the day, respecting your child’s pace to pick things becomes important as well as showing them and not just telling them. 

With our Milestone app, you can introduce financial literacy lessons that are age appropriate and engaging. It also teaches them the basic principles of earning, saving and giving. All this in one complete app.

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