Use These 4 Strategies for Teaching Kids About Money

For many parents, it’s hard to know the right age to start teaching kids about money. Personal finance education can seem like an abstract or beside-the-point concept for very young children, particularly when there are so many other worthwhile things to convey. And once kids reach a certain age, anything you try to say to them is liable to go in one ear and out the other.
Is there a “sweet spot,” a perfect age at which children are both capable of understanding financial concepts and receptive to what family, corporate and government authority figures have to say? Or do you just have to throw up your hands and wait for them to make their own money mistakes?
Actually, neither. It’s possible to begin personal finance education at a surprisingly young age, and kids are liable to be receptive to it indefinitely — as long as you make it fun for everyone involved. Here are four tips for teaching your kids about money and finance.
1. Lead by Example
Parents have a lot of leeway to invoke parental authority on money matters, but even kids can tell when your credibility is shot. If you’re clearly not making the right decisions with your own funds, how can you be expected to teach good financial hygiene with a straight face? As a matter of fact, transparency is the best medicine: Invite your kids to watch as you pay your credit card bills, balance your checkbook (online, probably — who actually uses a checkbook anymore?), and pore over your retirement account. This is particularly great for young kids who still think anything mommy and daddy do is “cool.”
2. Provide an Age-Appropriate Allowance
Even for the most precocious children, money remains an abstraction until they hold it in their hand and use it to purchase goods and services. That’s why it’s important to start giving your kids a modest, age-appropriate allowance once you’re confident the concept will stick. Consider depositing the allowance into a joint account opened with your child; as cash becomes less common, they’ll need to get used to debit card and virtually wallet payments anyway. Also consider making the full allowance contingent on the successful completion of certain chores.
3. Shoot Down Unwise Spending Decisions
It’s useful to let kids make their own financial mistakes — up to a point. If you get the sense that they don’t quite understand what they’re doing or are making questionable purchases just to spite you, put a stop to it by invoking the aforementioned parental authority. Pair this redirect with an explanation of why it’s important to reason through every financial decision. Consider setting them up with a fun, age-appropriate education tool like Financial Football, too.
4. When in Doubt, Make ‘em Work
This obviously isn’t an option for very young kids. For teens, though, a summer or part-time job can exert a powerful influence and dramatically improve financial IQ. There’s something intangible about transitioning from zero income (or a pittance-level allowance) to a meaningful, if still meager, income from a job at a grocery store or local parks department. Just make sure your child has all the support they need as they search for work. They’ll thank you later.

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