As parents, one of the most valuable things you can teach your kids is how to handle money. But when should you start? The answer: sooner than you think. Research shows that children develop their attitudes about money as early as age seven, so it’s important to introduce these concepts at a young age. Starting early gives your child the tools they need to be confident in managing money, which will help them navigate their future with greater financial independence.
In this guide, we’ll break down how to approach teaching your kids about money at every stage of life, from toddlers to teenagers. Whether you’re teaching them to save for a toy or introducing them to budgeting, we’ve got age-appropriate tips, activities, and resources to make it easier.
At Circadian Capital, we’re committed to helping you build a secure financial future for your family. Here are some tips to help you do the same with your kids.
1. Toddlers and Young Children (Ages 3 – 5)
At this age, your child’s understanding of money is very basic, but it’s the perfect time to start introducing to them its value. Young children can grasp that money is used to buy things, but they won’t yet understand how it’s earned. This is the time to focus on the idea of saving and spending.
Introduce the concept of “wants” vs. “needs.” For example, they can start to understand that food is a need, while toys are a want. Keep the lessons simple, fun and engaging.
You can introduce saving with a piggy bank or a simple jar system. Label each jar “spend,” “save,” and “share,” so they can start learning about the different ways to handle money.
Parenting Tip :Use play to reinforce these concepts. Try playing pretend store games where they “buy” items with play money. This can help them begin to understand how transactions work and that money is exchanged for goods. BBC Teach: Money and Me offers simple ways to introduce money concepts to children at any age in an interactive and engaging way.
Fun Activities to Try
- Play pretend shop games where they can exchange coins for toys or treats.
- Use a piggy bank or clear jar system to visually show how money can be saved.
2. Early School Age (Ages 6 – 9)
By the time your child is in primary school, they’re ready to learn more about money management. This is a great time to start teaching them about saving for things they want, like toys or books. You can also introduce them to the idea of earning money.
At this age, they’ll start to understand the difference between needs and wants and can begin to grasp the concept of budgeting. It’s a good idea to give them a small allowance, even if it’s just a few pounds a week. This helps them learn how to manage money in a practical way.
Parenting Tip: Give them a set amount of pocket money each week. Teach them to divide it up into three jars: one for spending, one for saving and one for donating. This gives them a tangible way to understand money management. It’s also a good age to start talking to your kids about banking basics like credit, debit and interest.
Fun Activities to Try
- Pizza budgeting is a fun way to teach your kids about income and expenses.
- Introduce simple budgeting with fun games like the “three jar” system – one for saving, one for spending, and one for sharing.
3. Pre-Teens (Ages 10 – 12)
At this stage, your child can handle more responsibility when it comes to money. They should begin to understand the concept of saving for bigger goals like a new game, gadget or a trip and budgeting for their weekly expenses.
They’re also ready to learn about earning money. Encourage them to do small jobs around the house or take on tasks like mowing the lawn, washing the car, or even starting a small business like a lemonade stand or dog walking. The goal is to show them that money is earned through work.
Parenting Tip: Help them set a savings goal for something they really want, then teach them how to budget to achieve that goal. This will encourage delayed gratification and help them understand the value of saving. GoHenry: Financial Education for Kids provides helpful tools and tips to teach financial literacy in a fun and engaging way.
Fun Activities to Try
- Start a business venture together, like a lemonade stand or helping out with gardening or pet-sitting for neighbours.
- Use a budgeting app to help them track their income and expenses.
4. Teenagers (Ages 13–18)
Teenagers are ready to learn about more advanced financial concepts, such as budgeting, understanding credit, and saving for big goals like college or a car. This is also the time when they should start taking more responsibility for their finances, including setting up a bank account and using a debit card.
Encourage your teen to get a part-time job or start a side hustle. Whether it’s babysitting, dog walking, or freelance work, earning money will teach them valuable lessons about budgeting and responsibility.
Parenting Tip: Introduce your teen to the concept of credit and how it works. Teach them about credit scores, interest rates, and the importance of managing debt. Also, consider setting up a debit account with a limit to help them get used to managing their own finances.
Fun Activities to Try
- Open a teen-friendly bank account like those offered by Barclays. This allows them to track their income, set budgets and spend responsibly.
- Help them set up a savings goal for something they really want, like a car, a phone, or a trip.
Conclusion
Teaching your kids about money is one of the best investments you can make in their future. The earlier you start, the more confident they’ll feel about managing their finances as they grow. By encouraging them to save, budget and earn their own money, you’re giving them valuable skills that will serve them for a lifetime.
Every family is different, but one thing is certain: financial literacy is key to raising financially responsible children. As you guide your children on their financial journey, don’t forget to plan for your own future. At Circadian Capital, we’re here to help you create a secure financial foundation for your family. Visit Circadian Capital to learn how we can assist you.