You might be too occupied with preparing your taxes to notice, but April is Financial Literacy Month! You’re probably financially literate, but are your kids? If you’re not teaching them about money, consider this a prompt to do so. After all, it’s your job to send financially responsible young adults out into the world! Plus, there’s a bonus —the more they understand about money, the less they’ll bug you about wanting this toy or that pricey pair of sneakers.
Here’s the plan I’ve put into place with my daughter, Sadie, who is almost 18. I hope that it helps provide a framework for you to teach your own kids. And please comment below — I’d love to hear your successes, failures and suggestions.
Age 2-4: Coin Counting
Sadie could differentiate between different coins — and eventually bills — at this age. She also loved to count them (quantity, not value) and drop them into her piggy bank, which was a great excuse to reinforce her counting skills. Playing with money was just as fun as playing with toys, so why not?
Age 4-6: Savings Account, Shopping
We set up a savings account in Sadie’s name and brought her to the bank so she could participate in depositing monetary gifts from family and friend into her account. She loves to watch her balance grow!
It’s not always fun to take your kids shopping with you, but we found that shopping presented a learning opportunity. Sadie could watch us compare prices, use coupons and check out. We found that witnessing us pay for things helped her to understand that there is an important exchange that occurs when you buy something.
When she was closer to 6, we would give her a small amount of money (ideally from her piggy bank) to spend on something she wanted. It was a real “aha” moment when she realized that money has value rather than thinking it comes from the clouds. We also explained how we work hard to earn the money we spend. These occasions allowed us to have an impactful wants vs.needs conversation.
Age 6-10: Chores, Allowance, More Shopping
For many kids, this is a good age for assigning chores and giving allowance. Sadie didn’t respond well to this approach at first so we discarded the payment-for-services-rendered arrangement, and instead assigned some things she is responsible for, like cleaning up after her guinea pig and straightening up her room. We also periodically asked for her help with other tasks, like vacuuming and dusting. She had no allowance at this age, but she received plenty of spending money from relatives for her birthday, Easter, etc., and she could spend a portion of that money and save the rest. We buy her things occasionally, but more often than not, she spends her own money. Therefore, she makes thoughtful financial decisions.
Age 10-13: Checking Account, Debit Card, Saving vs. Spending
We successfully moved to a paid chores plan! This was also helpful because it was around this age that she was more independent and would ask for money to spend when she was with friends, so rather than a constant back and forth, we paid her an allowance for completed chores, with served as her food money as well. It was amazing to watch her spending habits change when she was spending money that we gave her versus money from her allowance. She’s become a very savvy spender!
Sadie also started earning some money from doing some social media projects with me as well as doing periodic tasks for my husband’s business. She can spend some of those funds for something she wants, but she has to save some too.
Age 14 & Up: Independent Shopping, Debit Card
Sadie has more of her own money by now because she picks up extra jobs here and there. She has done things like pet sitting, baby sitting, piecework for a crafter friend and even a paid songwriting gig for an independent fragrance brand. She’s also doing extra jobs for my husband and me.
At 16, we opened a checking account with a debit card, which she uses for purchases. She also has a Venmo account so she can easily receive payment for jobs.
At 17, we started visiting colleges and talking about the financial reality of tuitions right now. We have been very transparent with her about how much we’ve put away for her education and how she will have some skin in the game. She is looking for more work now, and will also need to work while she’s at school as she will be responsible for her spending money while she’s away.
When she turns 18, she will apply for a credit card. This will be a good opportunity her to see how credit works. For bigger ticket items that she wants, like a tablet or, eventually, a used car (now that she’s driving!), she can save for a portion and then charge a portion and pay it off.
This will also be the time we’ll talk about the importance of building good credit and why it’s important to keep an eye on, and build, her credit score.
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