Money Smart Children

Money Smart Children

02/08/2018 0 By Anthony Ekanem

Children grow up to be adults. The lessons they learn as children will be carried with them as they become students, employees, husbands and wives, parents and grandparents. If they learn the lessons to be money smart children, the mistakes in adulthood would be less frequent and less disastrous. Some of those lessons learned in childhood relate to love, work, and values. You teach your children the things that are important to you and the lessons you want them to learn to be successful, happy, and productive.

Unfortunately, one lesson that is often neglected is the lesson of money.  Whether it is because parents don’t feel confident talking about money or they don’t think it’s important, many children grow up without money skills. This isn’t a lesson that you want to learn when you’re an adult. The consequences are too significant. They include financial stress, which can cause illness. Other consequences are debt, no savings, living paycheck to paycheck, and a life that’s more difficult than it needs to be. As parents there is a responsibility to teach your child to be money smart.

What does it mean to be money smart?

There are different components of being money smart. They include the concept of saving, of goal setting, and making your money work for you. Money smart means knowing that instant gratification isn’t always as satisfying as it might be, and saving for something you really want can pay off in ways that you just cannot imagine.

Teaching your child to be money smart means teaching them:

  • About saving money
  • About the importance of financial goals (long term and short term)
  • How to invest their money and make their money work for them
  • How to budget and allocate their money so they can pay for what they need and want
  • How to leverage technology and systems to stay in control of their money
  • That they’re the only person who can make decisions about their money
  • About the practice of giving or donating to help others in need
  • How to decide if they are going to spend money now or save it for later
  • How banks work
  • How to earn money and achieve their financial goals

These are some heavy lessons and in many cases they’re lessons that need to be learned over time. However, when you spend the time and energy teaching your child to be money smart, they will grow up to be confident with their money. You can trust that they’ll be able to go out into the world and stay out of financial trouble.

Why Teach Your Child about Money

How often do you feel stressed about money? Whether you’re trying to pay bills, save for your child’s college or your own retirement, money stress is a common problem in households. There are probably steps you wish you’d taken and mistakes you wish you hadn’t made.  And there is a good chance that you also hope that your child has it easier. There are many reasons why teaching your child about money is so important.

  • You want them to be less stressed about their finances when they’re adults.
  • You want them to be able to live comfortably.
  • You don’t want them living at home when they’re adults because they cannot afford to live on their own.
  • You want them to do better than you.
  • Bankruptcies and Debt

Learning about money now can help your child avoid some of the biggest money mistakes that people make. Perhaps you’ve made these mistakes yourself.  We’re talking about deep debt and bankruptcy. Teaching your child about money and starting when they’re young can help them avoid these unfortunate situations. No one wants financial stress and presumably no one really wants to file for bankruptcy or go into massive debt.

It happens from poor planning, overspending, and not knowing how to save for the future. These are the lessons you can teach your child now. It doesn’t matter if they’re six or sixteen; it’s never too early or too late to start. That brings us to the next topic to take a look at – when can you start teaching your child about money and how do you go about it?

When to Teach Your Child about Money

You might be surprised to learn that you can start teaching your child about money when they’re two years old. While your child may be older than that right now, it’s important to get started teaching them about money as soon as possible. And it’s never too late to begin. Let’s take a look at the concepts that you can teach your child at every age.


At this age you can teach your child about the concept of money – in other words, what money is and what it is not.  You can talk to them about the value of different coins and bills. You can also teach them that money is used to buy things. Playing store is an easy way to begin teaching the concept of money to young children.

Early Elementary School

At this age it’s a great time to start teaching about the difference between a want and a need. Children can help with the grocery shopping and begin to participate in decision making. This is also a great age to begin showing your child how to use a piggy bank and to introduce the concept of an allowance and working for money. By the end of elementary school, they should understand saving money to buy things that they want.

Junior High School

At this age, children are more than ready to begin earning money. You can tie allowance to chores or give them opportunities to earn money around the home. It’s also a good time to teach them about saving for their future and for things that they want to buy in the near future. At this age, a child can also begin to learn about investing and leveraging their money.

High School

By this time, your child should have learned some financial independence.  Hopefully, they’ve had the opportunity to work for money and have learned about saving for both short-term and longer-term goals. They may have an investment account and be actively saving money for college. Once your child is in college they will be well on their way to financial independence. Sure, you may be paying for college and helping them manage their finances. However, they should also be able to handle the majority of their financial decisions on their own. It’s never too late to begin teaching your child about money, saving, and investing. Next we’ll talk about opportunities to teach your child about money. Teachable moments happen often; the trick is learning to recognize them.

What Values Do You Want Your Child to Have about Money?

Finally, think about the values that you have about money and what you want your child to value. Some examples include:

  • Saving – Saving money for short-term goals, medium-term goals, and long-term goals. How can you model this value and help your child embrace saving?
  • Giving – Do you donate money to others? If so, what percentage of your income do you tithe? How can you model this value and teach your child to also donate some of their money or time to others?
  • Materialism – Children and adults both enjoy buying things. There’s a balance between buying what you need and what you want. Teaching this balance is difficult. Think about your own values on material goods and how you can model the values that you want your child to have.

Children will grow up with their own thoughts, beliefs, and values about money. Empowering them now with skills and behaviors that support good money management will only strengthen their abilities as an adult. Identify what you believe about money, model that behavior, and effectively teach your child to value money in a healthy and productive way.

Finally, because a bank account is part of the money management system that every child and adult needs to have,  talk about bank accounts at every age of your child’s life.