Age and Techniques to Start Teaching Your Kids About Money

Now more than ever, people realize that children need to learn how to manage money,
and the earlier, the better. A recent ING Direct study found that an overwhelming 87%
of teens admit to not knowing much about personal finances
. We often joke that
teenagers act as if they know everything, but in this study, they admit to not having a
clue how to manage money while also admitting they have a desire to learn.

So, Let’s teach them.

Children and teenagers develop the financial capability they’ll need in adulthood
throughout different stages and at different ages. Here are a few building blocks and
techniques to be aware of as your child grows.


Children develop the ability to plan ahead, remember information, multitask, solve
problems, and control impulses as early as age 3 and continue building them
throughout childhood.

Though you’ll want to keep lessons simple for young children, starting early will help
them learn the value of money and the basics of budgeting, so they’ll have those skills
when they’re older.

  • Give Your Kids Money to Manage: Making sure your children have their own money is the first step toward teaching money management. Younger children have no source of income, so provide an allowance tied to chores (representing how adults need to work to earn money), give it out freely for good behavior, or some combination of the two. Just make sure they have money to manage.
  • Teach Them Budgeting Basics: When children have their own, they must decide how to spend it and save it. Let’s say your child has an allowance of $5 per week but wants to buy a toy that costs $30. Teach your child to set aside money weekly, then buy the toy later.
  • Understanding That Everything Costs Money: things they’d like to buy. When they want a new toy, point out the cost and remind them how much they must spend.
    Children ages 3 to 5 are usually too young to understand abstract financial concepts.
    Still, they can build a foundation to manage money and other skills – but remember – it is essential to make learning fun and exciting for them.
    • Play Pretend – Pretending actually helps children focus, think flexibly, and plan ahead.
    • Space Journey Choices – Your child decides what to bring on a tiny rocket ship in this activity. Help them practice making choices and tradeoffs with limited resources, a key part of money management.
    • Active Games That Build Self-Control – These help children learn to wait, follow directions, pay attention, and practice controlling their behavior. Examples: Follow the Leader, Simon Says, and Red Light Green Light.

AODFCU’s Kids Club Accounts are designed for children from birth to age 6. With an initial deposit of $5, your child can start saving for the future and see the benefits of saving money.

Benefits include:

  • Dividends paid monthly
  • No withdrawal penalties
  • Quarterly Statements


Children and young adults use standards, shortcuts, routine practices, and rules to navigate daily financial activities. These areas develop quickly during elementary school and in the preteen years.

Between the ages of 6 and 12, you can help children absorb guidelines and habits that shape how they earn, save, and shop. Help your school-age child or preteen develop financial habits and values.

Teach Them to Understand and Shop Smart – While everything costs money, some options cost less. From buying generic products to making cost comparisons, adults try to make their budgets stretch as far as possible—and you can teach your kids to do the same with their allowances. Here are some fun ways and ideas to lead your preteens.

  • Bingo On The Go – The bingo game cards show some everyday things you and your children might see in your community or when you travel to other areas. You can talk with your children about what you see, where the money comes from to pay for them, and how important or valuable they are.
  • Building a Good Borrowing Reputation – People with a good reputation as a borrower are more likely to earn the trust of a lender. In this activity, your child analyzes the profiles of three different people to decide what kind of borrowing reputation they have.
  • Test the Claims of a TV Commercial – Explain to your child that TV commercials use particular words, music, and settings to make us want to buy. We can be disappointed if we purchase something advertised without checking it out first.

For younger children, keeping their cash in a clear jar can help, as it gives a straightforward visual representation of how much they have. Once they’re teenagers, however, it may be time to trust them with their own bank accounts. AOFCU has our Rising Star Teen Draft Account for teenagers from the ages of 16-19.

Benefits include:

  • No opening deposit
  • No minimum balance
  • No monthly fee
  • Will be opted out of the Paid NSF Program; no Overdraft Tolerance is available


It is essential to build familiarity with financial concepts and have the skills to make sound decisions. Teenagers and young adults have good opportunities to develop these skills if they start at an early age. Here are a few ways to prepare young people for future decisions.

  • Let Them Make Decisions (and Mistakes) – This one is tough for most parents or guardians because of our natural instinct to protect. But to truly protect, we must prepare and allow them to learn from mistakes. It is ok to offer advice, but don’t dictate what your children do with their money; allow them to make their own spending decisions. While they’re likely to make mistakes along the way, it’s better to make them—and learn from them—now rather than later.
  • Teach Your Teens About Credit Cards – Credit cards can be a handy financial tool, but they can trick you into overspending and spiraling into debt. Credit Card companies are coming after new users and will send your teenagers and young adults some very enticing offers. Explain to your teens how credit cards and interest rates work before they start getting inundated with credit card offers. Knowing the potential dangers can help them avoid getting over their heads with credit card debt.
  • Set a Good Financial Example – Your children watch what you do, so practice the same smart financial habits you teach them. One way to teach your children about finance is to involve them in your own financial decisions, which gives them context for the choices they see you making. Depending on what you feel your kids are ready for, you could involve them in some financial decisions, like what the family should save for next (that new television or a beach vacation).

Teenagers generally start to earn money and make decisions on their own. Adult supervision, guidance, and feedback can help them navigate successfully. Teach them the research and comparison shopping skills that help them find trustworthy information, process it, and apply it to their situation.

Discussing money decisions with a trusted adult can help children gain confidence in their reasoning. Start as early as three and continue to pour into your child’s ability to manage money. This is a life skill that will literally pay off in the long run. Reach out to us with any questions, and let us help you along this journey.

Contact us to set up an appointment so we can discuss your child’s saving and financial options.

*Certain restrictions may apply.
For more information, visit MyCreditUnion.gov

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