April 9, 2018

Recent studies show that only 24% of Millennials demonstrate basic financial literacy skills[1]. If your financial and personal aspirations for your kids aim higher than this, it’s time to begin focusing on financial literacy and teaching your kids about money.

There’s a lot to learn before entering the real world, including spending, savings, banking, earning, borrowing, giving, and much more – but it’s never too late! We have all the tools and resources you need, all organized in an easy, step-by-step guide to financial literacy for kids  from 3-18. 

Financial Literacy For Ages 3-4: Play Promotes Financial Learning

Your toddler is transitioning from infancy to early childhood. Their rapidly developing vocabulary, memory, and social skills make now an ideal time to start teaching them basic money concepts.

  • Introduce money with books, games, and imaginative play.
  • Start a coin jar to show how money accumulates.
  • Teach the difference between various coins and bills.
  • Work on counting and math with money e.g., four quarters equal a dollar.
  • Talk about money in appropriate contexts, such as visiting the bank or grocery shopping, and how money is earned.

Learn more about preschool financial literacy.

Financial Literacy For Ages 5-7: Kids Love To Learn About Money

Your child’s developing their own personality and preferences, including learning styles. Play to these strengths when building their financial literacy skills.

  • Your kids will observe and reflect your money habits, so be a good role model.
  • Discuss spending considerations, such as how you make a purchase decision, e.g., using coupons or considering value.
  • Keep banking concepts simple e.g., how to make a bank deposit and withdrawal.
  • It’s time to introduce a small allowance, possibly tied to chores.
  • Kids are ready to make small purchases, learning how to budget through a week.

Learn more about early elementary financial literacy.

Financial Literacy For Ages 8-10: Growing Financial Skills

These are critical years for teaching the fundamentals of basic money management. Your kids possess a more in-depth understanding of money, and are still interested in learning from you.

  • As your kids mature, increase their allowance and spending responsibilities.
    • Explain the concepts of wants versus needs.
    • If your child runs out of money:
      • Consider assigning additional chores to earn extra allowance.
      • Review purchase decisions and money-saving tips like coupons.
      • Discuss free activities they can enjoy.
  • Encourage saving for longer-term goals, such as holiday and birthday gifts.
  • Earnings from small jobs inspire self-confidence, responsibility, and work ethic.
  • By age 10, it’s time to establish a kid-friendly bank account.

Read more about financial literacy for 3rd to 5th graders.

Financial Literacy For Ages 11-13: The Critical Tween Years

Changes in mood, personality, and physiology make the tween years challenging. However, increased intellectual understanding and self-awareness, plus your tween’s desire to be viewed as a young adult, make this an ideal time for broadened financial independence.

  • Encourage stronger budgeting by paying allowance bi-weekly.
  • Expand purchase responsibilities in preparation for high school.
  • Layer on the concept of longer-term savings, such as saving for a car or for college.
  • Help your tween gain banking experience, ideally using technology tools.
  • Teach the importance of giving to others, particularly as it relates to family values.
  • Allow small loans, as needed. This helps teach your tween how to get out of debt.

Learn more about financial literacy for tweens.

Financial Literacy For Ages 14-16: Money Management For Teenagers

Despite how it seems, your teen’s still watching and learning from you. Particularly given mounting peer pressure, it’s essential that you continue to be a strong role model, reinforce family and financial values, and encourage wise wealth decisions.

  • Peer pressure’s at its peak, so keep tabs on spending to ensure your teen stays on track, personally, academically and financially.
    • Allow a few ‘want’ purchases, while balancing them against budget needs.
    • Encourage technology to monitor spending and budget tracking e.g., Mint.com.
    • Consider extending a loan for a significant purchase. This helps your teen learn about loan repayments and the advantages of remaining debt-free.
  • Allowances should now be paid monthly, and may need modifying to reflect part-time earnings.
  • Allow greater autonomy, but maintain shared bank viewing.
    • Teach your teen how to write a check, balance their account, etc.
    • Consider a debit card, but don’t cave to the credit card!
    • Discuss how to safeguard personal data as teens are susceptible to scams.
  • It’s time to discuss who’s paying for a car or college, so that your teen knows what’s expected of them in terms of funding.

Read more about the importance of teaching teens about money.

Financial Literacy For Ages 17-18: Money Prep Before College

A key parenting role is to ensure that your teen’s ready for true financial independence, at college and beyond. Set realistic expectations by talking together about your teen’s current lifestyle costs relative to future earnings, and college funding.

  • Encourage your teen to research and apply for applicable scholarships, to help cover tuition and other college costs.
  • Peer pressure is finally waning, but spending is likely increasing, in line with additional purchase responsibilities like gas, car maintenance costs, cell phone bill, etc.
  • Require greater budget responsibilities to foster sensible financial habits.
  • Continue to monitor your teen’s spending and engage in conversation.
  • If your teen doesn’t work during the school year, a summer job can offer career insights and add to savings.

Learn more about finances for teenagers and follow our monthly guide to teaching your kids about money before college.

For more information about teaching your kids about money, check out our Advice By Age, Resources, and For Parents pages. To learn how our company can help you and your family achieve wealth success, contact SageVest Wealth Management.

[1] https://www.nefe.org/Press-Room/News/Millennials-Gap-Between-Confidence-and-Knowledge

Prepared by SageVest Wealth Management, a personal financial advisor in Northern VA. Copyright 2018.


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