June 16, 2017

Learning about money as a resource for life achievement is a critical aspect of your child’s development. You can encourage financially savvy kids through age-appropriate activities and responsibilities that focus on key financial principles like savings for kids, budgeting, and giving. Piggy banks, chores, and allowances are some of the traditional tools that can help support your child’s financial education.

What happens to financial literacy, though, in today’s digital age, when your kids are more likely to see you pay by swiping a credit card or phone, rather than with cash? 

The emergence of today’s cash-free society can present parents with challenges, particularly during early childhood. However, by the tween and teen years, those same digital options can prove to be effective, useful, and engaging ways of supporting your kid’s financial education. Kids thrive on technology. Embracing it as part of your kid’s financial education can promote learning, while also keeping you involved through joint viewing capabilities. Here are a few recommendations at varying ages ranging from 3 to 18.

Introducing Money To Young Children

Teaching your kids about money lays the foundation for lifelong success. The earlier you begin, the better. We typically recommend introducing basic money concepts around ages 3-4.

While today’s technology world offers perks, a cashless society is particularly challenging for teaching kids about money during early childhood years. Children under seven can’t yet think logically or mentally manipulate information, making physical props i.e., dollar bills and coins essential at this age, alongside hands-on experiences essential to their learning.

Try to use real money when buying things as much as possible, but even if you don’t, be sure to:

  • Teach your child about real money at home.
  • Play store together, with a cash register and real or play money.
  • Count coins to support basic math skills and familiarize your child with different coins and values.
  • Start a change jar to illustrate how savings accumulate.
  • Take your kids to the store and discuss how you make purchase decisions.
  • Visit the bank together and discuss how banks work.

Teaching Tweens About Money

Kids ages 8-12 exhibit new skills and thought patterns, and by the end of this developmental stage, they should achieve the milestone of logical thought, allowing them to understand the concept of cashless money transactions. Pre-teen years are a prime time for financial learning, as tweens are eager to learn, especially from you. Seize this opportunity with technology and wise parenting!

  • Select financially-focused websites, online games, and apps for your kids to enjoy.
  • Be sure to limit online purchase opportunities, however.
  • Choose a family-friendly budgeting and saving app to use together.
  • Establish a custodial bank account with basic online functionality.

Hopefully your tween has moved beyond the egocentric focus of earlier years. They can now understand different perspectives, and enjoy more cooperative, enriched social interactions.

  • Focus on philanthropy, including different ways of giving e.g., time, skills, and money (both cash and online).Increased language, math, and reasoning skills allow for rapidly expanding financial learning.

A greater understanding of time concepts allows your pre-teen to define and begin saving for both short- and longer-term financial objectives.

  • Transition towards bi-weekly allowances, paid by electronic transfer to your tween’s custodial account.
  • Help your pre-teen develop a basic budget.

Financial Literacy For Teens

While it’s never too late to start your kid’s financial education, hopefully by now your teen’s well on the road to future financial success.

By age 13, your child’s mastered the ability to think abstractly, reason deductively, and mentally manipulate data. They also enjoy being early adopters of new technology. These new skills make the teenage years ideal for digital money management.

  • Online banking can encourage saving by providing convenient, easy access to real-time data on account balances.
  • Money management apps can enhance budgeting skills. Some allow parents to maintain ultimate control over the funds, while others come with a debit card of sorts.

Greater personal independence translates into increased financial responsibility.

  • Digital banking supports financial autonomy, but still allows you some control e.g., viewing rights.
  • Your teen can now work part-time. Electronic wage deposits may be possible.
  • Explain how taxes work, and how to file an electronic tax return.
  • Transition spending and saving responsibilities to your teen.
  • Consider having your teen establish a savings account for college and beyond, with online viewing to facilitate monitoring savings progress.
  • Adjust allowances, relative to your teen’s income and increased financial responsibility.

SageVest President, Jennifer Myers, provided additional insights on financial literacy for digital-age kids in the Daily Worth’s article: How Do We Teach Kids About Money When They Never See Cash?

Helping your child to develop a healthy relationship with money is critical to future life and financial success. SageVest Wealth Management is an investment management and financial advisory firm with a family-centric approach to wealth services. Please contact us for more information.

Prepared by SageVest Wealth Management, a top financial advisor. Copyright 2017.


The information contained herein is obtained from sources believed to be reliable, but its accuracy or completeness is not guaranteed. This article is for informational purposes only. The views expressed are those of SageVest Wealth Management and should not be construed as investment advice. All expressions of opinions are subject to change and past performance is no guarantee of future results. SageVest Wealth Management does not render legal, tax, or accounting services. Accordingly, you, your attorneys and your accountants are ultimately responsible for determining the legal, tax and accounting consequences of any suggestions offered herein.

In accordance with IRS CIRCULAR 230, we inform you that any U.S. Federal tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used by a taxpayer, for the purpose of (a) avoiding penalties under the Internal Revenue Code or that may otherwise be imposed on the taxpayer by any government taxing authority or agency, or (b) promoting, marketing or recommending to another party any transaction or matter addressed herein.

The provision of a link to any third party website does not mean that SageVest endorses that website. If you visit any website via a link provided here, you do so at your own risk and indemnify SageVest from any loss or damage incurred.