Money is one of the most simple and most complicated things we use as a society. We have obvious things like spending it on goods and services, but there are complicated things like investing it and paying taxes, too. How do we teach money in an age-appropriate way that will help our kids be responsible but not stressed out? That’s the million-dollar question.
Elementary school children are ready to start learning about money in low-stress ways. Keeping it fun and interesting is important. Kids this age really don’t need to be bogged down with knowing the family budget, which can actually create anxiety. Instead, they need to learn the fundamentals of how money works in our society. Budgeting for small items in pretend play and real life can help them make those connections.
In prior generations, kids may have seen a lot more cash and coins than your children do. Many of us use our debit cards for almost every purchase and rarely carry cash. But debit cards are not the tactile learning experience kids need. This means you may need to put in some effort to expose your kids to coins and cash money.
There are many ways to start kids off with learning about coins. I recommend getting them a piggy bank and giving them coins to put in it often. You can tie those coins to an allowance or doing chores, but you don’t have to. You can make a goal of paying for something each week with cash and just give your child the coins to save. Whatever you do, be sure your child gets the full variety of coins over a short amount of time—quarters, dimes, nickels, and pennies.
From there you can introduce the value of each coin and how many of each it takes to make a dollar. Playing a trading game where you and your child trade equal amounts of money in different coins is a great way to reinforce amounts. Skip counting with dimes and nickels is also fun.
Playing store is one of my favorite ways to work with kids on understanding money. You can put price tags on their toys and get started. A toy cash register is one of my favorite toys for younger kids. Whether you get one that has a working calculator or not, it is a fun way to bring this game alive and make money more interesting. You can add even more math fun by measuring or weighing what your child is selling.
It is also ideal to let your child use some of their money to make small purchases. For my kids, one of the first places they ever learned to spend money was in a dollar store. With only a small amount of money, they could buy anything in the store! Well, at least one of anything. Once my kids were older, they shopped in bigger stores where they had to compare prices to how much money they had to spend.
By middle school, you should help your student set up a savings account at your bank or credit union. If your child already has an account, this is an appropriate age to explain interest. It may be worth taking your child into the bank to ask about how much interest their accounts are earning and if the bank can do any better. Double-check that there are no fees or penalties applied to student accounts. If there are, chose somewhere else to bank and teach your child how to close an account and open a new one at a better bank.
Be aware, for your student to have an account at a bank or credit union you will probably need to have one there, too.
This is also a great age to introduce computer games that require managing money or creating a budget. This website has links to a variety of money-based games.
At the credit union I use, students over 13 can have a checking account with a debit card, but yours may have a different age requirement. Most will offer one by age 16 at the oldest. As soon as it is reasonable, help your child open a checking account and start learning how to use it. What age is best to do this may vary. As a parent, you should have an idea when your child is mature enough to have this responsibility.
You can deposit into your child’s account their allowance or money they earn from chores and they can then spend that on things they want. Be sure to help your student download the bank’s app or access their website so that they can check their balance often to make sure they don’t try to spend more than they have in the account.
If your child has saved enough, they may want to consider opening further accounts or starting a CD, Certificate of Deposit. The last time we were in the bank, my student found out that they were getting a better interest rate on their student savings account than is offered on other investment tools they can use.
This is also the best age to have some real discussions about money with your student. Show them the household budget and all the things your family spends money on. If you have debts, explain those. If you have made some poor financial decisions in the past, or just ones you regret, tell your student about those too. Hearing about how you put too much on a credit card when you were young may help your student avoid that mistake. It is also a good time to talk about career plans and the salaries associated with those.
Why discuss those now? Because your teen doesn’t yet get to make those decisions for themselves. So they are more likely to be interested to hear how credit works. Once they are holding their own card, they may believe they know everything, and won’t listen as well.
College is the ideal time to revisit banking with your student. Our credit union offers a specific savings account that allows us to set aside money for college and get a better interest rate than other ways we could be saving. Investing in a 529 plan is another option, but harder to access, and not as practical if your student is already in college. This savings account does require we prove the money is being spent on college when we take it out of the account, or there are penalties. While it isn’t ideal for everyone, this is a great way to earn extra interest if your student has been given money to use for college or you are setting some aside each month for that cause.
Once your student is 18, you should also encourage them to get a credit card. Shop around and find one that is a good fit. Some require students to have a job, but others are designed specifically for students in college who may not have a regular income. Whatever you choose, this is the best way to help your student start earning a positive credit score that will help them when it is time to do things like buy a car or rent an apartment.
Explain that it is best to spend only small amounts on the card at first and pay them off each month. This demonstrates a pattern of fiscal responsibility that will help their score go up. Using cards and paying them off is a simple way to build your score. Remind them to not charge more than they can easily pay off. This will prevent them from going into debt. Be sure they understand the goal is to build a credit score, not just use the card for extras they can’t afford.
What else are you doing to teach your student about money? Tell me in the comments!
About the Author
Laura Sowdon, OTR/L is an occupational therapist, writer, speaker, educator and creator of the Five Senses Literature Lessons homeschool curriculum. She has worked as an occupational therapist with children in public and private schools, as well as private practice. Laura has taught and managed homeschool co-ops as well as homeschooling her own three children. Laura is dedicated to the idea of educating children at a pace that aligns with brain and physical development milestones and respects neurodiversity in all its forms.