Money is a tool, not a goal. This is an important mindset to instill in children from a young age in order to help them develop a healthy foundation for understanding finances. Teaching kids about money at every age is essential for setting them up for success as adults. In this article, we will explore ways to talk to kids about finances at different ages and provide resources to help practice what they have learned.
Elementary School Age
It is important to start discussing finances and money with kids at a young age in order to set their foundation. When kids ask questions about money, it is important to be open and honest with them. For example, if they ask how much you make or why your house is bigger than someone else’s, you can use this as an opportunity to share values with them. You can talk about how different people make money or why some people choose careers that may not be high in income but bring them fulfillment.
Introducing the concept of “wants versus needs” is a great strategy for teaching young kids about finances. This concept is the basis of budgeting and helps kids understand the importance of taking care of their needs before their wants. It is an easy concept for kids to grasp and one that they can carry with them into adulthood.
Middle School Age
As kids mature, they can begin to understand more complex financial concepts such as budgeting, how different jobs have different pay, and savings accounts. If there is something your child wants that you are not willing to pay for, you can use this as an opportunity to guide them through a real-life financial exercise. For example, you can list out the cost of the item and the amount of money they have and then work with them to come up with a plan to achieve this goal. There are many resources available, such as the iMOM budgeting sheet, which introduces the concept of “share, save, and spend.”
High School Age
By the time kids reach high school age, it is important to ensure that they are well-prepared and understand how finances work. This is a good time to take the conversation about money to the next level and provide more context about your salary, such as the bills and living expenses that you are responsible for. This can help kids understand that when they are offered a job with a certain salary, the money that comes home will be less due to deductions and expenses.
It is also important to discuss topics like banking, 401K, insurance, and taxes with high school age kids. This can help them understand the importance of saving for the future and the role that these financial tools play in managing their money.
College Age
When kids reach college age, it is important to talk to them about managing their finances on their own. This may include setting a budget, opening a bank account, and understanding credit. It is also a good time to discuss student loans and the importance of paying them off in a timely manner.
In addition to discussing financial concepts with kids, it is important to model good financial behavior for them. This can include setting and sticking to a budget, saving for the future, and making responsible financial decisions. By teaching kids about money at every age and modeling good financial behavior for them, you can set them up for success as adults.
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