Kids and Money Teaching your kids about money at different ages

When it comes to talking to kids about money, starting early and continuing the conversation over time can help them form healthy financial habits. Below are some age-based money interactions you may want to consider. Since every child is unique, age is used as a proxy for the developmental stages where certain approaches may be well-received and relevant.

Preschool (3–5 years old): At this stage, children begin linking choices to consequences. This is a great age to be very literal about money. You can consider saving money in an easy “piggy bank” format and/or integrating a weekly allowance (rule of thumb: half your child's age). You could even save toward specific toys to begin introducing the idea of delayed gratification. Studies have shown that children who are able to delay gratification around this age also can do so more effectively later in life.¹

Early primary school (6–8 years old): Children begin to make decisions and have an increased awareness of others. Evolving the piggy bank into a “three jar” format – one for saving, another for spending and a third for sharing – can allow your child to practice their new problem solving capabilities. Children can begin making choices about how much they want to save for bigger purchases later (a major toy), how much they want to spend now and how much they would like to give to others.

Late primary school (9–11 years old): Children tend to have an increased desire for independence. During this developmental stage, try shifting from “three jars” to a bank account. Consider establishing a “default” savings rate of an allowance that goes directly into the bank account. This approach could involve the idea of “matching” to inspire savings and investing behaviors.

Teen years (12–18 years old): Peer and other social influences may dominate your children’s attention – and the feeling of knowing more (than one actually does) may emerge, too. During this time, you may want to resist the urge to pay for everything – whether it be summer jobs or setting up spending budgets, there can be lessons taught around the value of a dollar and how much life really costs. It can also be helpful to review the level of savings in their bank accounts and introduce the concept of investing.

Young adulthood (19–22 years old): Planning for the future and searching for identity becomes a focal point. Whether it be sharing in – or budgeting around – the cost of education, lifestyle expenses and post-graduate independence, there are many opportunities to talk about money. At this stage, it’s important to create room for “low risk” trial and error around independent money decisions. For example, testing your child’s ability to pay a credit card bill on time might not be optimal, but helping your child understand the importance of paying that bill on time and giving them the tools to independently do so can be an important life skill for many years to come.   

Keep in mind that every child is unique, so some approaches might work better than others. The first step is to start the conversation.