Many people wonder, why teach kids about money? After all, they’re just kids—what could they possibly need to know about finances right now? Well, here’s the thing: teaching toddlers about money isn’t just about preparing them for adulthood. It’s about giving them a head start on making smart financial decisions and developing habits that stick for life.

When you start teaching toddlers about money and introduce them to concepts like saving, spending wisely, and budgeting early on as they develop, you’re setting the stage for a future where they don’t just survive financially, but thrive. It’s like teaching them the rules of a game they’ll be playing for the rest of their lives.

The earlier they learn these rules, the better they’ll play the game and the more wins they’ll rack up along the way. So, why wait? Here is how to teach kids about money by age;

Teaching Preschoolers and Kindergartners About Money (Ages 2-5)

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Alright, you might think preschoolers are too young to understand money, but trust me; they’re little sponges ready to soak up knowledge. Teaching toddlers about money at ages 2 to 5 helps lays the groundwork for more complex financial lessons later on. To teach preschoolers and kindergarteners about money, try these tips;

• Use Clear Jars for Savings to Visualize Money Growth

Forget the old-fashioned piggy banks. Instead, use clear jars to save money when teaching toddlers about money. Why? Because kids love seeing things grow.

When your child drops a coin into a clear jar, they can see their money literally piling up. It’s like magic to them!

Yesterday they had a few coins, and today they see more. Make it fun and exciting by celebrating their growing savings.

Say things like, “Look how much your money has grown! Isn’t that cool?” This visual reinforcement makes the concept of saving tangible and motivating for them.

• Play Coin Identification Games to help them Learn Names and Values.

Turn learning into a game. When teaching toddlers about money, you will want to sit down with them and show them different coins.

Play a matching game where they have to identify and match the coins to their correct names and values. For instance, you can say, “This is a quarter. Can you find another quarter?”

Then, let them color pictures of the coins. This will not only teach them about money but also help with their cognitive and fine motor skills.

Note: Kids learn best through play, so incorporate money concepts into their playtime.

• Play Store or Restaurant to Impart Basic Commerce Concepts

Children love playing in stores or restaurants. So if you start teaching toddlers about money, you may want to set up a mini store at home with household items.

Give them pretend money and let them “buy” and “sell” items. You can be the customer, and they can be the cashier.

This role-playing game helps them understand the basic concept of exchanging money for goods and services. For example, you can say, “I’d like to buy this apple. Here’s a dollar.” They’ll grasp the idea that money is needed to buy things and enjoy the interaction.

• Set Examples with Your Own Money Habits

Remember, little eyes are always watching. Your kids learn a lot by observing you.

If they see you saving money, budgeting, and spending wisely, they’re likely to mimic those behaviors. For instance, you can begin teaching toddlers about money by letting them see you put money into your own savings jar or budgeting for groceries.

As you continue teaching toddlers about money, explain to them your actions in simple terms like, “We’re saving money to buy something special later.” This sets a positive example and reinforces good money habits.

Teaching Elementary Students About Money (Ages 6-8)

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By the time kids reach elementary school, they’re ready for more complex money concepts. This means your approach will vary slightly from that of teaching toddlers about money. Here are some tips for teaching kids about money when they’re between ages 6 and 8;

• Set Up a Savings Account to Explain the Concept of Interest

Take your child to the bank to set up their own savings account. Make it an exciting event! Explain how a savings account works and the concept of interest.

You can say, “The bank will give you extra money just for keeping your money there.” Show them their bank statements regularly so they can see their money grow over time.

• Do Coin Collecting as a Hobby to Teach About Currency

Coin collecting can be a fascinating and educational hobby when teaching kids about money. Start with something simple, like state quarters.

Get a coin collection book and help them fill it up. Visit the U.S. Mint website together to learn about the history and design of different coins.

This activity teaches them about the value of money and the importance of preserving it. Plus, it’s a fun way to bond and learn together.

Discover: 15 Places to Buy Quarters Besides a Bank

• Clip Coupons to Teach about Savings

Before your next trip to the grocery store, involve your child in clipping coupons. Explain that coupons help save money.

At the store, let them find the items that match the coupons and see the total savings at the checkout. You can tell them, “We saved $10 today with these coupons! Now we have more money to save or spend on something else.” This hands-on activity reinforces the value of money and the concept of savings.

Also Read: 13 Super Ways to Save Money at Whole Foods

• Play Restaurant at Home to Teach About Payment and Change

Set up a restaurant at home where your child takes orders, serves food, and calculates the bill. Use play money to pay for the meal and make change.

This game helps them understand the transaction process and the importance of accuracy in handling money. For instance, after they “serve” you, you can hand them a $10 bill and ask for change. This reinforces their math skills and their understanding of money.

Teaching Preteens (Ages 9-12)

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Unlike teaching toddlers about money, preteens are ready to start understanding the value of money. They are also ready to learn how to make informed financial decisions. Here are some tips for teaching preteens about money;

• Do Comparison Shopping to Show how to Evaluate Cost vs. Quality

Take your preteen shopping and show them how to compare prices and evaluate cost versus quality. For example, compare a brand-name product with a generic one.

Discuss the differences in price and quality and decide together if the brand name is worth the extra cost. You might say to them, “This brand-name cereal costs $4, but this generic one costs $2 and tastes the same. Which one should we buy?” This will help them understand the concept of value and make informed choices.

Discover: Top 10 Best Price Comparison Websites for Online Shopping

• Do Yard Sales to help with Setting Values and Negotiating

Organize a yard sale and let your preteen be in charge of pricing items and negotiating with customers. This experience teaches them about setting values, making decisions, and handling money responsibly.

For example, if someone offers $1 for an item priced at $2, let them decide whether to accept the offer or negotiate a better deal. This hands-on experience is invaluable for understanding the worth of items and the art of negotiation.

• Give Commissions for Chores to Teach on Earning

As children approach their teenage years, it’s essential to teach them about the responsibilities that come with managing money. Instead of giving your child an allowance, pay them commissions for completing chores.

Assign specific tasks like taking out the trash, cleaning their room, or mowing the lawn and pay them accordingly. This teaches them that money is earned through hard work and responsibility. You might say, “You earned $5 for mowing the lawn. Great job!”

Teaching Teens About Money (Ages 13-15)

Teenagers are ready to learn more advanced financial concepts, such as budgeting and saving for the future. So feel free to introduce your teenagers to more complex financial concepts to prepare them for adulthood. Here are some pointers;

• Set a Budget to Teach Needs vs. Wants

Teach your teen to set a budget by distinguishing between needs and wants. Discuss essential expenses like food and school supplies versus non-essential items like video games and snacks.

Help them create a simple budget to manage their allowance or part-time job earnings. You might say, “Let’s make a list of your needs and wants, and see how much money you have for each.” This will teach them to prioritize their spending and make informed financial decisions.

Also Read: Which is the Best App for Saving Money in 2024

• Have them start saving for College to Show the Importance of Early Savings

It’s never too early to start saving for college. Encourage your teen to set aside a portion of their earnings from a summer job or allowance into a college savings account.

Explain the importance of saving for their education and how it can reduce the need for student loans in the future. You might say, “If you save $50 a month, you’ll have $600 by the end of the year. That’s a great start for your college fund!” This will motivate them to save and plan for their future.

• Introduce them to Stock Market Basics

Teach your teen about the stock market by discussing companies they are familiar with, such as Disney or Apple. You can simulate investing by choosing a few stocks and tracking their performance together.

Explain how investments work and the potential benefits of long-term investing. You might say, “If you had invested $100 in Apple five years ago, it would be worth $300 today.”

• Teach Credit Cards and Student Loans

Educate your teen about the dangers of credit card debt and student loans. Discuss alternatives for funding their education, such as scholarships, grants, and part-time work.

Emphasize the importance of living within their means and avoiding unnecessary debt. This knowledge will help them make informed financial decisions in the future.

Teaching Older Teens About Money (Ages 16-18)

As teenagers approach adulthood, it’s crucial to teach them how to manage their finances independently. Unlike toddlers where you teach about just the basics, preparing teenagers for their financial future involves teaching them about long-term planning and investment. Here are some pointers;

• Help them Manage a Bank Account to Expose them to Real-World Money Management

Don’t just help your teen open a bank account. Also, be available to teach them how to manage it. Show them how to monitor their balance, set up direct deposits, and avoid overdraft fees.

This real-world experience prepares them for managing their finances in the future. You might tell them, “Let’s check your bank statement together and see how much money you’ve saved.” This will help shape them into becoming financially responsible.

• Introduce them to Budgeting Apps to Teach on Tracking Income and Expenses

Introduce your teen to budgeting and money saving apps like Rocket Money. These tools can help them track their income and expenses, set financial goals, and stay on top of their budget.

Encourage them to use the apps regularly to develop good money management habits. When you introduce older teens to budgeting apps, you teach them to keep track of finances and make informed decisions.

• Explain Compound Interest

Explain the concept of compound interest and its benefits to motivate them to start investing early. Show your teen how starting to invest early can lead to significant growth over time.

Use real-life examples and calculations to illustrate the potential of compound interest. You might say, “If you invest $1,000 today and it grows at 5% per year, it will be worth $1,628 in ten years. That’s the power of compound interest!”

Also Read: How to Double your Money without Risk

• Teach on Entrepreneurship and Starting a Small Business

Encourage your teen to explore entrepreneurship. Whether it’s a summer job, freelance work, or starting a small business, entrepreneurship teaches valuable lessons about earning, managing money, and taking risks.

Support their endeavors and help them navigate the challenges of running a business. This experience will help them develop a strong work ethic and entrepreneurial spirit.

Discover: How to Make Money Right Now at 17

Closing Thoughts on how to Teach Kids about Money

Teaching toddlers about money is a journey that evolves as they grow. Start early and build on their knowledge to set them up for a lifetime of financial success. Your efforts will pay off as they develop into financially savvy adults. Happy teaching!