Financial Literacy For Kids

Ages 8-10

These are prime years for teaching the basics of money management. Your kids are gaining a more in-depth understanding of how money works and are still interested in learning from you. During this age range, your kids should be ready for a number of mature financial steps.

Key Money Basics for Ages 8-10

Consider small jobs to promote the value of earning money.
Require your kids to assume greater financial responsibilities.
Focus on saving for longer-term goals.
It’s time to open a custodial banking account with your child.
Make sure you remind your kids that money is earned by working.

Playing

Teach Through More Advanced Play

Your kids are getting older, but play is still important and helps support key money and math concepts. Encourage learning through enjoyable activities, just at a more mature level, expanding the broader concept of how money works. Here are some fun money activities to support your children’s financial education:

Play board games together like ‘Monopoly’ and ‘The Game of Life.’
Allow your kids to access online games that focus on money and money management.
Personal and family saving jars remain the best introduction to savings. Let the family savings jar fill over time with spare change to demonstrate the concept of accumulated savings.
Have your child count and roll coins from their savings jar or piggy bank into paper bank wrappers. Let them exchange the coin rolls at the bank for dollar bills to save and spend.

Peer Pressure

Prepare for Peer Pressure

Around age 8 is when peer pressure begins to influence some children. It’s important to set good examples, and to find an approach that recognizes your kids’ viewpoints, while still supporting your family values.

Listen and discuss your kids’ requests openly and with understanding. You can’t win every battle, nor do you want to turn every request into one, so try to compromise some of the time.
Always explain how you reach your decisions and how they relate to what’s important to your family, e.g., saving for family vacations, college, shared activities, or giving to others.
When you have to say “No”, focus on how your children are special in non-material ways, such as sporting or musical talents, and how you love them for their kindness, determination, intelligence, and more.

Spending

Give Your Kids A Little Independence

As your kids gain a greater understanding of how money works, they’re ready for more responsibilities and independent purchases. Give them guidance on sensible spending, planning ahead and how to learn from mistakes.

Increase your kids’ allowance annually and include greater purchase responsibilities, such as paying for toys, snacks on outings, and refreshments at the movies.
Your kids are growing up, but they still want, need, and value your input.
- Give guidance on making wise purchase decisions based upon price, value, quality, needs versus wants, what you can afford, and family values.
- Help them monitor spending and purchases, using a simple budget as needed.
- Provide guidance, but as they get older, give your children more free rein in making spending decisions.
One of the best ways to teach budgeting is to avoid bailouts.
- If your kids run out of money to buy snacks, encourage them to plan ahead and pack snacks to take with them on activities.
- If they need more money to buy something, allow them to work around the house to earn additional money.
- Encourage free activities when allowance money is spent too quickly.

Allowance

Teach Wise Money Management

Your kids are ready to assume greater purchase responsibilities, which means a bigger allowance. Make sure the amount is modest, yet large enough to accommodate learning, expanded decisions and choices. It should still be paid weekly and in cash.

Some parents tie an allowance to chores. This is a personal decision. The most important objective is tying the allowance to financial responsibility and agreed-upon purchases.
There’s no precise allowance amount. The best number is one that recognizes:
- Realistic expectations about what things cost.
- Consideration of how much allowance your child is ready to manage.
- A progression that gradually prepares your kids for real life and an attainable budget that they can afford in the future.
- Your individual family values and beliefs about money and more.
The amount of allowance you choose should be adequate to cover:
- Basic purchase needs for which your kids are responsible.
- A small amount for discretionary spending.
- A small amount to be set aside for savings and longer-term goals.
Work together to develop a simple budget that helps guide your children’s spending and saving choices.
You need to stand firm and don’t bail them out if your kids overspend and run out of money. Reinforce the need to stick to their budget.
If something is really important and their allowance isn’t enough, you can encourage small jobs around the home to earn extra cash.
Review their allowance yearly (perhaps around your child’s birthday). Annual increases are recommended, in line with increased financial and purchase responsibilities.

Earning

Promote the Value of Work & Wages with Simple Jobs

It’s time to teach the value of earning a dollar. Simple experiences like setting up a lemonade stand go a long way towards developing a strong work ethic. Encourage your kids to be creative and think of jobs to earn a few dollars.

This is a great age to advocate service jobs at or near home. Examples include being a kitchen or mother’s helper, raking leaves, pulling weeds, washing cars, pet sitting, etc.
Working helps kids to develop a stronger sense of personal responsibility.
Money earned can cover allowance shortfalls if your kids go over budget and run through their money too quickly. If you don’t have it, earn it.
Always recommend that some amount of earnings be allocated to saving for special purchases, longer-term savings, and giving.

Saving

Encourage Short-term Savings

Your kids are ready to start thinking longer-term. Encourage them to set aside cash toward future goals, both big and small. Savings should be rewarding, so let them enjoy the fruits of their efforts, while also committing some savings to the future.

Help your kids to begin saving for future purchases such as birthday gifts for family members or extra spending money for family vacations.
Make sure to set one or two big goals a year like saving for a new bike. Help them to focus on the goal and support their saving success. You could even consider instituting a savings matching program as an extra incentive.
Also encourage long-term savings for college. We strongly recommend this by age 10, even if you plan to pay for college. Saving for college teaches the importance of planning and saving for the future, and defines a goal of academic achievement.
Long-term savings are ideally deposited into your child’s bank account by age 10.
Some parents set specific saving goals such as 10% to 30% of your children’s allowance. The right amount for you depends upon family goals and financial abilities. It also depends upon your participation in monitoring saving achievements.

Banking

Establish A Custodial Bank Account

By age 10, your children should be ready for the next step toward financial independence: opening a bank account. This can be both exciting and scary for kids, so be sure to talk in advance to prepare them.

Do your research in advance. It’s important to find a kid friendly bank. Talk to the bank before you take your kids. Ask about maintenance fees and charges for your kids to visit branch locations to make deposits and withdrawals. Also ask about educational services, including printed and online features.
Opening an account can be disconcerting if your kids don’t understand that they can get back the dollars and coins they’ve saved, and that they’ll get different dollars and coins when they go back to make a withdrawal.
- Be sure to discuss these concerns before visiting the bank together.
- If your children have dollars or coins of sentimental value (e.g., crisp bills from birthday gifts), keep those at home until your kids are ready to part with them.
Set objectives for how the bank account will be used, such as setting aside a certain amount of allowance money and any earned income toward big purchase goals, plus some amount for long-term term college savings.
Encourage trips to the bank, but still keep weekly spending money at home. If spending, saving, and giving jars work for your kids, continue to use them at home, with the bank facilitating longer-term savings.
When your kids make withdrawals, be sure to discuss them in advance, making sure some amount of savings remains committed to the future, while still enjoying some of the fruits of saving today.

Giving

Demonstrate Different Ways of Giving

This is a great age to involve your kids in giving to worthy causes. They’re old enough to appreciate both the need and how they can help. Giving can be financial or of time and talent. It should reflect and reinforce the family values you want to instill.

The most important lesson in giving is direct involvement. This means having experiences with organizations and causes you support, or participating in school-based charitable efforts.
If you believe in financial giving, encourage your kids to give a portion of their allowance and earnings to worthwhile causes.

Make sure that they make the contribution in person so that they can see the smile and hear the thanks that make their gifts meaningful.
Some parents establish separate jars at this age, for spending, saving, and giving. Consider adding a jar to save for giving if this aligns with your family values.

Lifestyle

Empower Sensible Expectations for Life

Many kids are now focused on lifestyle choices such as clothing, activities, technology, and vacations. They’re also listening to what you say about other people’s choices. Be mindful of the impressions, judgments, and expectations you’re creating.

Think about what you say when you talk about something you want or must have, and consider what your kids are learning from you.
Refrain from negative comments about others, such as how someone dresses or their life choices. Make sure that your actions and comments support your values.
Always remember that the experiences your kids enjoy today become their baseline of expectations going forward. Focus on creating realistic financial expectations.

Role Modeling

Teach Financial Responsibility by Example

These are formative years. You remain the most important example in your kids’ lives, and they still want to learn from you. The examples you set now will determine how your kids will ultimately manage their own money. Act wisely.

Be sure that you’re setting a good example by thinking about the following:
- Your own money personality and how you manage your money.
- How you interact with your children, family members, and others regarding money topics.
- What you say about work.
However you react and relate to money, try to avoid extremes. Model sensible spending patterns that are neither too restrictive nor too free.

If you are financially affluent, consider the wealth effect and the benchmarks your lifestyle establishes. Make sure that the privileges your kids enjoy are ones that they can expect to sustain later in life.