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Smart Saving Starts Early: Tips for Teaching Personal Finance to Kids

Updated: Nov 12, 2023

Hey Parents! We get it; raising kids is a wild, wonderful journey filled with challenges and triumphs. One thing that often gets pushed to the back burner is teaching your little ones about money. Sure, they might not have jobs or bills yet, but instilling good financial habits early can set them up for a lifetime of success. I'm here to help you navigate the sometimes daunting world of teaching personal finance to kids. From preschoolers to teenagers, I've got your back. So, buckle up, and let's dive into some practical, easy-to-implement strategies that will make teaching your kids about money as simple as 1, 2, 3!


Table of Contents


Mom and daughter

Preschoolers: Making Money Fun

Preschoolers, with their boundless curiosity and eagerness to learn, are like tiny sponges ready to absorb the world around them, including the basics of money. While the concept of finances might seem a bit advanced for these little ones, there are playful and imaginative ways to introduce them to the world of money.

Interactive Play and Pretend Money

Preschoolers love to play pretend, and you can use this natural inclination to teach them about money. Create a mini make-believe store at home. Use play money, or even create your own colorful, child-friendly currency. Let them play the roles of both the buyer and the seller. This hands-on experience helps them understand the concept of buying and selling while having a blast.

Storytime with Money Tales

Preschoolers adore stories, so why not incorporate money lessons into their favorite bedtime tales? There are numerous children's books specifically designed to teach financial concepts in a fun and engaging way (including our My First Finance Book Coloring Books!). Look for stories that revolve around saving, sharing, and spending wisely. As you read together, pause to discuss the characters’ choices and encourage your little one to share their thoughts. These stories can plant the seeds of financial wisdom in their young minds.

Piggy Banks and Savings Adventures

Introduce your preschooler to the magical world of piggy banks. Get them their own adorable piggy bank and explain that it's a special place to keep their money safe. Encourage them to drop in spare change or small bills occasionally. Make a game out of it – every time they save, celebrate their achievement together. This simple act not only teaches them the concept of saving but also instills the value of patience and delayed gratification.

Grocery Store Learning

Turn a routine grocery shopping trip into a fun and educational experience. Allow your preschooler to pick out a few items within a set budget. Discuss the prices, compare products, and let them hand the money to the cashier. This real-life scenario helps them understand the exchange of money for goods and introduces them to the concept of budgeting, albeit in a simple way.

Money-themed Crafts and Activities

Preschoolers love crafts, so why not incorporate money-themed activities into their creative time? Make play coins or bills using craft materials and teach them basic math skills by counting and sorting the money. You can also create a homemade money puzzle by hiding play coins or bills in a container filled with rice or beans. The excitement of discovery adds a playful twist to learning about money.

Remember, the key with preschoolers is to keep it light, interactive, and enjoyable. By integrating money lessons into their playtime and daily activities, you're laying a strong foundation for their financial education journey, all while having a great time together!


Elementary School Kids: Allowances and Chores

family splashing at lake

Congratulations! Your little one is growing up, and with that comes the perfect opportunity to introduce them to the world of allowances and chores. Elementary school is the ideal age to start teaching kids about earning money through hard work and responsibility.

Creating a Chore Chart: Responsibility Meets Reward

One of the best ways to teach elementary students about money is by linking it to chores. Sit down together and create a colorful chore chart. Include tasks suitable for their age, such as making the bed, setting the table, or cleaning up their toys. Assign a specific monetary value to each chore. This not only teaches them the concept of earning money but also instills a sense of responsibility and the importance of contributing to the household.

The Allowance Approach: Managing Money Independence

Consider giving your child the opportunity to EARN a regular allowance. Discuss how they earn their allowance, through Providing Value to the household! This can be done through chores, or any other creative idea you have like helping Grandma and Grandpa out! Encourage them to divide their allowance into different categories, like investing, saving, spending, and sharing. Provide jars or piggy banks labeled with these categories (one for each category). This tangible method helps them visualize their money management and understand the value of saving for future goals.

Goal Setting and Saving: Dreaming Big

Elementary school is a great time to introduce the concept of saving for goals. Help your child set achievable goals, whether it’s buying a new toy, a favorite video game, or even saving for a family outing. Encourage them to save a portion of their allowance or gift money toward these goals. Celebrate their successes and milestones. This not only teaches them the importance of saving but also boosts their confidence and determination.

Shopping Smart: Budgeting in Action

Take your child grocery shopping or for school supplies and turn it into a budgeting adventure. Give them a specific amount of money and involve them in decisions about what to buy. Discuss prices, compare products, and encourage them to make choices within the budget. This practical experience helps them understand the value of money, smart spending, and making informed decisions based on available resources.

Investing: Think of the Future!

Elementary age is a great time to start helping your kids think about the future, and what better way to do this than by learning about investing. Investing inherently only makes sense if you’re thinking about long-term goals, if you weren’t then you’d just be spending all your money today! You can start with simple constructs like a High Yield Savings account; which just gives you money at a set interest rate (or what we like to call a Magic Piggy Bank). You can then use that to lean into compound growth while learning about the stock market!

If you’re looking for a tool to show how investing in the stock market works and the powers of compound interest, sign up for our website and check out our free content section to get access to our fun game!

Educational Games and Apps: Learning Through Play

In the digital age, there are plenty of educational games and apps designed to teach kids about money. Explore age-appropriate apps that offer interactive lessons on budgeting, saving, and spending wisely. These games make learning about money enjoyable and reinforce the concepts they are learning at home and in school.

Remember, elementary school is a fantastic age for kids to grasp the fundamental principles of personal finance. By involving them in real-life money situations, you are equipping them with essential life skills that will serve them well in the future. So, dive into the world of allowances, chores, and budgeting, and watch your child blossom into a financially responsible young learner!


Middle Schoolers: Budgeting Basics and Smart Spending

Family fishing

Middle school – a time of growing independence and budding responsibilities. As your child enters this exciting phase, it's essential to delve deeper into financial education. Middle schoolers are at the perfect age to grasp more complex financial concepts, laying a solid foundation for their future financial well-being.

Understanding Budgeting: Planning for the Future

Middle school is an ideal time to introduce your child to the concept of budgeting beyond their allowances. Help them create a basic budget that includes various categories such as investing, fun spending, personal items, and short-term savings for future goals. Discuss the importance of planning ahead and making intentional financial decisions. Encourage them to track their spending and review their budget regularly, fostering a sense of responsibility and awareness about their financial choices.

Saving for Goals: Dreaming Big and Setting Targets

At this age, children often have specific interests or hobbies they're passionate about. Whether it's a gaming console, a summer camp, or a school trip, help them set meaningful savings goals. Encourage them to research the costs and create a realistic savings plan. Discuss different saving strategies, such as setting aside a portion of their allowance, money earned from odd jobs, or gift money. Setting and achieving these goals instills a sense of accomplishment and reinforces the value of saving for future aspirations.

Smart Spending and Needs vs. Wants: Making Informed Choices

Middle schoolers are increasingly exposed to advertisements and peer influences, making it crucial to teach them about smart spending. Discuss the difference between needs and wants, emphasizing the importance of distinguishing essential purchases from impulsive desires. Encourage them to research products, read reviews, and compare prices before making a purchase. Introduce the concept of value for money – finding products or services that offer both quality and affordability. By making informed choices, they learn to appreciate the value of their hard-earned money.

Exploring Banking and Digital Transactions: Financial Literacy in the Digital Age

In today's digital world, understanding banking basics and online transactions is essential. Introduce your child to the basics of banking, including savings accounts, interest rates, and ATM usage. Discuss the advantages and risks of online transactions, emphasizing the importance of online safety and privacy. If appropriate, consider opening a joint bank account, allowing them to experience firsthand how to manage money digitally while under your guidance.

Encouraging Entrepreneurship and Investments: Nurturing Financial Creativity

Middle schoolers often exhibit entrepreneurial spirit and creativity. Encourage them to explore hobbies or skills that could be turned into small business ventures, such as handmade crafts, tutoring services, or digital content creation. Discuss the basics of investments, introducing concepts like stocks, mutual funds, and the power of compounding interest. While the topic may seem complex, breaking it down into understandable bits can spark their interest and nurture their financial creativity. Our book, “The Financial Explorer” can also help break these concepts down in a fun way!

By empowering middle schoolers with these essential financial skills, you're not just preparing them for the present but also equipping them with valuable tools for a financially secure future. Encourage their curiosity, answer their questions, and be their guide as they embark on this exciting journey toward financial literacy and independence.


Teenagers: Financial Independence and Responsible Decision-Making

high school graduates

Ah, the teenage years – a time of newfound freedom and growing responsibilities. As your child transitions into adolescence, their understanding of money deepens, and so do the challenges they face. It's essential to empower them with the right knowledge and skills to make wise financial decisions.

Part-Time Jobs and Financial Responsibility

Many teenagers start exploring the world of part-time jobs, which can be an excellent way to learn about investing, earning, saving, and spending money. Encourage them to manage their earnings responsibly. Discuss the importance of setting aside a portion of their income for investments, savings, and future goals. Help them open a brokerage account and start putting money into a Roth IRA for retirement saving. You can use compound interest calculators to show how little they need to invest at this age to become millionaires in retirement (hint: it can be as low as $50 a month!).

Introducing Credit and Responsible Borrowing

As teenagers approach adulthood, the concept of credit becomes relevant. It’s crucial to demystify credit cards, loans, and interest rates. Teach them about the importance of building good credit and the consequences of debt. Emphasize the value of living within their means and avoiding impulsive purchases. Discuss real-life scenarios and help them understand the impact of their financial choices on their credit score and future financial opportunities.

My favorite thing to do with credit cards is to just pretend like they’re debit cards. Personally, I don’t carry or use a debit card for anything. Why would I when there’s so many points and perks with credit cards? But I also will NEVER carry a balance on a credit card. With 18-22% interest fees, it is quite literally theft to yourself if you don’t pay off your credit cards every month. (Can you tell I’m passionate about reducing credit card debt? I think it’s a national plague!)

Encouraging Entrepreneurship and Investment

Teenagers often have innovative ideas and passions. Encourage their entrepreneurial spirit by discussing small business concepts or investment opportunities. Help them explore hobbies or skills that can be turned into a small business venture. Consider ideas with low start up fees, like lawn mowing or car washes. Or more tech ideas, like website design for local businesses!

Continue to discuss the basics of investing, including stocks, mutual funds, and retirement accounts. Help them understand that investing is always a risk, however there are ways to dramatically reduce that risk (like not day-trading). Investing with a minimum of a 5-year time horizon is a great way to reduce risk. That way any market fluctuations in the short term won’t cause them to get nervous and pull their money out of the market before a recovery is possible!

Promoting Financial Responsibility in Everyday Life

Beyond earning and spending, teenagers need to understand the significance of responsible financial behavior in their daily lives. Discuss topics such as budgeting for personal expenses, understanding the cost of living, and managing utility bills. Teach them about the importance of comparison shopping and finding the best deals. Practical knowledge about handling everyday expenses equips them with essential life skills as they prepare to live independently.

Encouraging Open Communication

Lastly, maintain open communication with your teenager about financial matters. Encourage them to ask questions and seek guidance when needed. Share personal experiences and stories to illustrate financial concepts. By fostering a supportive and non-judgmental environment, you empower your teenager to make informed decisions and navigate the complexities of personal finance successfully.

Remember, the teenage years are a critical period for shaping financial attitudes and behaviors. By providing them with the necessary tools and guidance, you are preparing them for a financially secure future. So, embrace this journey together, and watch as your teenager develops into a financially responsible adult!


Conclusion: Empowering Future Financial Leaders

Congratulations, parents, you’ve embarked on an incredible journey of shaping your child’s financial future! Teaching personal finance to kids is not just about money; it’s about nurturing skills that will empower them for a lifetime. From the imaginative play of preschoolers to the entrepreneurial spirit of teenagers, you’ve learned how to instill crucial financial lessons at every stage.

Remember, it’s not just about dollars and cents; it’s about values, responsibility, and smart decision-making. By integrating these practical strategies into your child’s upbringing, you’re setting the stage for a financially savvy, independent, and confident adult. So, keep the conversations open, the lessons engaging, and the encouragement high. Together, you’re creating a generation of financial leaders ready to navigate the complexities of the future. Here’s to smart saving, wise spending, and a future filled with financial success!


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