Money Smarts Blog
Teaching your kids about money at every age
Apr 13, 2021 || Lisa Perkins, Regional Director, Retail Delivery
As a mom of three myself, I know how important it is to see my kids succeed. I certainly know money isn’t everything. But understanding how to save and spend it is an important life lesson. So, I went to some fellow IHMVCU team members to learn how they’re teaching their kids about money. Here’s what I found out:
YOUNGINS (3 TO 8 YEARS):
At this stage, kids are becoming more independent and developing new skills all the time. This is a great time to teach your kid(s) about types of money, buying things, and banking.
Erica Hebbeln, mom of a 3-year-old and supervisor of our member service representatives, has this handy cheat sheet hanging near her daughter’s piggy bank. This is a constant reminder to teach her little girl about money and the value associated with each. It’s gotten her daughter excited to “swave.”
Make it fun:
Money Naming Game: In addition to the money cheat sheet, lay out coins and teach your kid(s) their names and worth. You can try this with paper money too after showing them 100 cents equal one dollar. Keep an eye out to prevent anyone from swallowing coins! After some practice, ask your kid what each coin or bill is called and what it’s worth whenever you spend in cash.
Playing Store: Get basic items: toys, candy, fruit, stickers, etc. and have your kid set up a store booth. Have them place values on the items and make pretend money to pay with. Your kid will learn about prices of goods and how people buy things.
Bank Visit: Bring your kids with you to open a savings account in their name. Teach the concept of interest and how money will grow simply by leaving it in the bank. Get a piggy bank for home so your kid can start saving their money in a fun way, and deposit the money into their account when it’s full.
TWEENS (9 TO 12 YEARS):
Kids don’t grow as much at this stage, but their minds continue to develop. Kids this age focus on integrating with society and the world around them. Teach them that their choices matter and how they impact their lives.
When we chatted with Jennifer Claeys, mom of two and an IHMVCU Member Service Representative, we learned cash is no longer king for this up and coming generation. He’d rather use his mom’s card instead of cash. In fact, any cash he does get ends up in his little sister’s piggy bank (lucky her). Jennifer decided to offer her son a prepaid debit card that she can add to whenever he earns money. Added bonus, she no longer worries about her son making unauthorized gaming purchases on her card since he has a card of his own.
Make it fun:
Allowance: Hard work pays off, and an allowance is a great motivator. Allow them to earn money for doing household chores or playing sports. Bonus money for good grades can be a powerful driver for school performance. Each time they “get paid,” encourage them to put a portion in to savings.
Garage Sale: Have your kid select items they’d be willing to part with. Help them price their stuff reasonably and help run the garage sale. Allow them to keep the money from anything that sells. This activity teaches them to give up things they don’t need and how to value things appropriately.
Pro tip: list their items on sites like Facebook or Nextdoor. This lets them sell items throughout the year instead of waiting until there's enough for a garage sale.
Three Jar Method: This is a popular way to teach kids about money management. Have three jars labeled saving, spending and sharing. Have your kid decide which jar(s) to put their money into. Explain how their decision impacts how they’re able to use their money in the future. Your kid will feel empowered by choosing which jar(s) to invest in. At the same time, they’re learning how to manage their money. If your kid is like Jennifer’s, have them bring their jars to the bank once they’re full. And offer them a prepaid card for the total in the spending jar.
TEENAGERS (13 TO 18 YEARS):
Teenage years are a turbulent time with changes physically and emotionally. At this stage, kids are starting to form their personal identities. Teenagers are capable of handling more advanced aspects of money, it’s a good time to teach them about entrepreneurship, college financing, and credit/loan basics.
Sarah Mason, mom to a working 17-year-old and an IHMVCU Assistant Branch Manager, has always taught her daughter to pay herself first so money is available when emergencies arise. This was very helpful when her daughter’s car needed some repairs. And while her daughter has always been very responsible, she called her mom in a panic when her card was declined at the pump. Sarah took this learning opportunity and ran with it. They had an important discussion about keeping some cushion in your checking account and reminding her to keep an eye on her balances with our mobile app.
Albrey Traman, mom of 3 teens and Branch Manager, teaches her kid the value of money by giving them a spending limit when the time comes for new clothes. Instead of going out and getting them what they want. Her and her husband transfer $100 into their checking accounts to go shopping. They’ve learned to budget and have become quite thrifty.
Make it fun:
Compass Playlists: Have your kid take a look at our online courses to learn financial basics and more. Even better take them together so you can discuss what they learned. Check out our Compass Playlists.
College Discussion: Start searching for realistic college choices with your kid as early as 9th grade. This allows more time to gauge their interest and see what’s financially feasible. Talk about college costs aside from tuition like room and board, textbooks, school supplies, etc. When the time comes, encourage them to apply for scholarships, grants, and financial aid.
First National Bank of Mom (or Dad): Learning the rules of borrowing money early will help your kid in the future. If they want to buy something they don’t have the money for, offer a personal loan if their request is reasonable. Agree on an interest rate and repayment. If everything goes well, consider giving them their interest back.
The saying “It’s never too late to start” is extremely relevant when teaching kids about money. The subject matter is important for everyone to understand, no matter what age. The biggest takeaway: you can never talk too much about finances with your kid. They will appreciate that you took time to educate them about money at an early age. As they grow older, they’ll feel more confident and excited about their financial future thanks to you.