Money Smarts Blog
Teaching Your Kids About Money at Every Age
Dec 18, 2023 || Lisa Perkins, Regional Director, Retail Delivery
As a mom of three, 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.
Ivy S., mom to a 4- and -7-year-old and Universal Member Services Representative (UMSR) at our East Kimberly Road Branch, uses A Money Bunny book series, that introduces the idea of earning, spending and saving money in a smart way.
Make it fun
Money naming game: Lay out coins and teach your kid(s) their names and worth. You can try this with paper cash 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 like toys, candy, fruit, stickers, etc. and have your child 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. Float Teller Megan Q. got her two boys (ages 4 and 6) the Melissa and Doug money playset for Christmas. Since it's about the size of a real cash drawer, she's excited for them to practice their counting skills. They had a dollar store cash register and still love playing with it!
Credit union visit: Bring your kids in to open a Balance Builder Savings Crew 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):
Although kids don’t grow as much at this stage, 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 those choices can impact their lives.
When we chatted with mom of two and Milan Branch UMSR Jennifer C., we learned cash is no longer king for this up and coming generation. Her son would 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.
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 into a branch 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.
Avenue of the Cities Branch Manager Sarah M., who is a mom to a 14-year-old, gave these three ground rules she follows in her home:
- Immediately transfer/deposit 25% of any gift or earnings to Balance Builder Savings Crew (her son watches cats pretty regularly and earns money).
- If you want it, wait three days and revisit it. If you still want it after three, buy it. Sometimes she lengthens the time period depending on the purchase.
- For larger purchases that require some saving, she'll have him write down financial goals - list what he's saving for. And when he wants to spend money, she asks him (judgement free) how that fits in to his goal. Sometimes it's worth it, sometimes it's not.
Jim O’Leary, Financial Coach at our Moline - 52nd Avenue Branch, has some special advice for the teenager stage:
- If they ask for something, ask them if they're willing to pay for it using their money.
- Give them an allowance of their age plus $2 a week.
- Once they start working, start a Roth IRA.
- As soon as they turn 18, do a share pledge loan. Tell them from the start you won't cosign for them, to think about how much time it takes to earn the money before you spend it and what you spend it on, and to make money work for you not the other way around (save).
Make it fun:
Compass courses: 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 Courses.
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.