Teaching Kids About Money: Age-Appropriate Ways to Talk Finance

Money management is an essential life skill, but knowing how to discuss finances with children can be challenging. Whether you’re a parent or foster carer, the way you talk to kids about money should depend on factors like their age, personality, attention span and comprehension level. Use this guide on age-appropriate financial topics to teach your children money basics.

Ages 3-5 – Understanding Money Concepts

The preschool years are a great time to introduce kids to the idea that money has value. Children this age learn well through play and observation.

• Set up a pretend shop at home with fake money and goods. Let them scan items, hand you money and collect change.
• Point out money in everyday situations. Count coins together when paying at a shop. Show them the price tags on items and explain that the number says how much the item costs.
• Get piggy banks so they can see coins accumulate. Let them decorate their piggy bank unique to them.
• Give an allowance for small tasks like making their bed. Let them save some in their piggy bank and spend some on things they’d like.

Ages 6-8 – Money Fundamentals

Kids this age are beginning to understand more complex money matters, but they still learn best through experience.

• Open bank accounts to teach saving versus spending. Show them how to deposit money and track what they have.
• Introduce an allowance system with three buckets for spending, saving and sharing. Let them allocate the money how they’d like.
• Discuss making responsible choices when spending their allowance money. Guide them through weighing wants versus needs.
• Engage them when you’re shopping. Explain price differences, discounts, and coupons. Show them how you create and stick to a budget.

Ages 9-11 – Financial Literacy

Older children have better attention spans and critical thinking to grasp more advanced topics.

• Make budgeting relatable with apps where they can allocate money to different expense categories. Give them hypothetical budgets for things like planning a birthday party, and share how you budget your wages or foster care allowance from thefca.co.uk to provide real-world examples.
• Introduce bank cards and show them how you track purchases and balances online. Discuss being responsible with cards – connected kids cards, available at certain bank accounts, are great for this.
• Start talking about saving for bigger goals like spending money for your next family holiday or a new device they want. Help them calculate how long it will take to save.
• Find apps that make money topics like interest rates interactive. Invest in stocks for favourite brands.

Age 11+ – Real-World Financial Skills

In the tween and teen years, kid are ready for more responsibility and independence around money matters.

• Increase their financial responsibility in age-appropriate ways. For example, have them pay for extras like video games or clothes they want, rather than need, with their own money.
• Discuss smart money habits like comparing prices, shopping sales and resisting impulse buys. Take them along when you’re choosing financial products.
• Let them earn money through odd jobs for neighbours and friends like pet sitting or selling their unwanted items online.
• Talk through managing debt responsibly with products like student loans and credit cards. Explain impacts on credit scores.

The earlier you teach money management, the more responsible children will be with finances as teens and adults.

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