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Teach Kids About Money Early!

As parents, we naturally have a want to protect our children from the harsh realities of life. It may seem unnecessary to burden them with the “adult” concerns about money at such a young age. But, new research from Cambridge University in the UK (1) shows money habits that children adopt by as young as 7 years old will stay with them into adulthood. A poor understanding of money and budgeting can make life difficult in the future.

Younger Children

Experts suggest teaching children money basics should begin as young as age 4. Children should be given a weekly allowance and then asked to divide the money into four:

- Spend

- Save

- Give away

- Invest

Once these four categories are set, discussing how to allocate the money with the child can be an excellent teaching opportunity. It is important that during the discussion the child must be allowed to make their own decision on how to divide and spend their money.

Allow the child to make a purchase, even if your opinion is that it is unwise. A month after the item was bought, ask the child if they are pleased they spent their money on the item. Ask if the item was as good as they thought it would be. Reflecting on past purchases will help the child in future decisions about what is worthwhile.

The aim of teaching children about money when they are young is to teach them that money has value. You attempt to teach them ways of saving and spending in a responsible way. Financial literacy can assist them in adulthood. This is vital today, as money often changes hands electronically, and the child rarely gets to see money change hands.

In the past, where the child witnessed physical money change hands in exchange for goods, money had a clear value. Today where transactions involve a swipe, there is a reduced connection between money and purchasing power.

High School Age

When children reach high school, taking financial literacy further is appropriate. For example, taxes, insurance, and investment should be brought into the conversation as naturally as possible. When a child is considering some part-time employment, taxes should be discussed. When learning to drive, then a conversation about insurance is appropriate.

One of the factors that will decide how happy a life your child will enjoy is the way they handle their finances as an adult. Having financial stability has a huge impact on the future, and as a parent, this should not be ignored. In an ideal world, financial literacy should be taught in elementary school, before habits become engrained, but most school districts only cover it at the high school level.

Slightly less than one-third of young people join the workforce after high school with inadequate financial skills. Even those that go on to further education are rarely offered an elective in personal finance. In conclusion, to provide better financial education, the earlier parents and school begin, the better.




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This is so true, most kids think you just swip a card that has endless funds on it.


The key is teaching kids how to balance money and purchases rather than just covering what they need when they need more.

Replying to

Great idea


This is so important!

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