OneAZ Credit Union

What Age Should I Talk to My Kids About Money?

Published: September 21, 2022

Mom introducing her son to a banker at OneAZ Credit Union.

When it comes to teaching your kids about money, where do you start?

What age should you start having the money talk, how much do you teach them, and how do you make sure they don’t repeat the same financial mistakes that so many of us have already made?

Whether your child is still young or you have a teenager at home, here are some great money lessons to teach at every age.

Preschool (Ages 3 to 5)

When it comes to teaching preschoolers about money, the lessons need to be visual. Their little minds are always learning and they take in the most knowledge through visual references. To a preschool age child, two quarters are shinier (and better) than a $20 bill. Pennies look different than nickels, and so do quarters and dimes.

The bottom line is that money is purely visual at this age, therefore take the necessary steps to capitalize on the visualization aspect of money.

Where Do They Save Their Money (Ages 3 to 5)?

You can usually find a clear piggy bank online for a few bucks or you could just make one using an old plastic jar from home. Whatever you decide to use, make it easy for your child to drop change into the clear jar, but also make it difficult for them to remove any of the change.

Over time their jar will fill up and the important thing isn’t the value of what is inside their clear jar, but rather what they see inside it.

How Do They Earn Money (Age 3 to 5)?

This may surprise you, but giving your child an allowance at any age will be sending them the wrong message about money.

Over time an allowance teaches us that money doesn’t come from work, but rather it comes from doing nothing. Instead, we want to teach our kids that money comes from work or from providing value. If you work, you get paid and if you don’t work, you don’t get paid.

As far as work goes — remember they are three years old. Work at this age may mean feeding the dog, picking a few weeds, sweeping the garage or whatever it is you would like them to do.

The goal at this age is for them to make the connection between working and earning money — not just getting money.

Do I Pay Them For Everything (Ages 3 to 5)?

Ask yourself — do you get paid for everything you do?

Of course you don’t!

This is also a great age to teach your children that not everything we do is for money. Between packing lunches for school, making dinner, taking care of the lawn, and picking up kids from practices — parents have their hands full with plenty of jobs that don’t actually pay the bills.

Therefore, it’s perfectly acceptable for your children to have a few jobs that don’t generate income either. Maybe it’s making their bed, emptying the trash, or any other chore they can do as part of contributing to the family’s responsibilities.

When Do I Pay Them (Ages 3 to 5)?

Right away.

Remember, the goal for your child is to grasp the idea that money comes from work. However, at this age they need to get paid while the work is still fresh in their minds. If you wait too long, they will forget about the work they did and lose the connection between providing value and earning money.

Also, don’t worry too much about how much to pay them. Remember, between ages three and five, two nickels still feel like they are more than one quarter.

How Much Can They Spend (Ages 3 to 5)?

You can let them spend all of it.

Don’t worry, they will eventually start learning about saving money as they get a little older, but at this age you want them to also learn that stuff costs money.

Up to this point your child is learning that money comes from working and now they will learn that money can help them get toys or other items they want. Have them dump out whatever is inside their clear jar and then allow them to spend every last penny. This is also a great time to teach them that they can’t afford everything they want — which means it’s okay to say “no” when they want something they don’t have enough money to buy.

Ages 6 to 13

Up to age 6, money was completely visual. However, once your child begins to grasp basic math skills, it’s time to start educating them about the monetary value while continuing to use the power of visual teaching.

Earning Money (Ages 6 to 13)

When it comes to earning money, this is the perfect age to teach that different jobs earn different amounts of money. Also, there are still jobs around the house that will not be paid. These jobs are also known as chores.

For example, washing the car may earn $10, picking weeds may earn $3, and picking up after the family dog or cat may be a chore that doesn’t pay any money at all.

Paydays (Ages 6 to 13)

As your child grows older, it’s also a great opportunity to teach them delayed gratification. As you well know, we typically don’t get paid every time we do a job.

Between ages 6 and 13, start establishing paydays. Maybe you choose to do it every Sunday or maybe you make it easy and pay them on the same days you get paid.

The key is consistency and to hold your child accountable. This means they get paid on their same payday and they also only get paid for what they actually earned in between each pay period.

Save, Give, Spend (Ages 6 to 13)

Before age six, your child was allowed to spend it all. However, the reality is you and I don’t get to spend every dollar we earn.

We have taxes, insurance, 401k contributions, monthly bills, and everything else in between. By the time we get whatever is left for spending, it’s much less than what we originally started with.

You have the opportunity to teach them about this concept by through the Save, Give and Spend method.

Save

The reason we start with saving is we want to create a savings habit at an early age. Can you imagine how different life would be if you were taught the value of saving money before actually spending it?

As far as how much to save, help your child decide. Remember, you still want your child to be engaged and excited about money, so it’s probably not the best idea to have them save 90% and only leave them with a small amount to still give and spend.

A great starting point for saving is 30%.

Give

Next we want to teach the importance of giving at a young age. Giving is the most important lesson you can teach your child about money.

This is where you get to choose how your child will give, what they will give to, and how much they give. It can be an offering jar at church, a tip jar at the ice cream shop, or they can give to anyone for that matter.

A recommended starting point for giving is 10%.

Spend

Finally, you’ll want to make sure that your child has the funds to spend on things that bring them joy. If you think about it, after you pay taxes and set aside some money for savings from your paycheck, you’re often left with about 60% from your gross amount.

Therefore, start your child off with 60% for spending.

When payday comes and your child has earned $30, $9 goes to savings, $3 goes to giving and the remaining $18 is for spending.

Ages 14 and Up

Once your child is officially a teenager, it will be time to give them a little bit more freedom when it comes to managing their finances. Chances are they are going to make a few mistakes and it is going to cost them, but those will be important lessons for them and may help them avoid more costly in the future.

Their First Real Job (Ages 14 and Up)

So far, your teenager has learned a lot about managing money. They started off by learning that money comes from work and that money can be traded for things they want.

Then, they learned about delayed gratification with paydays and how to manage what is leftover after you save, give and then spend.

The next transition is getting a real job — a job that isn’t funded by mom or dad.

Show Them the Money (Ages 14 and Up)

As your teenager starts to earn money on their own, they’ll start realizing that not all of the money they earn gets deposited into their bank account at the end of their pay period and even less stays there over time. There’s taxes and Social Security, and movies with friends and items on their Amazon wish lists.

As they learn about allocating their own funds, it’s the perfect time to show them your earning and spending habits.

Now this may sound a little extreme since many of us were taught that finances are private and we shouldn’t share it with anyone else.

However, you’re not sharing with just anyone, you’re sharing the finances with your teenager who will learn a valuable lesson about money they will never forget.

Keep in mind, you have an incredible amount of knowledge about finances your teenager doesn’t yet know about. Would you rather them learn about money after they get a few credit cards, max them out, and experience a ton of unnecessary heartache? Or, would you rather them learn from you while still under your roof?

With that said, show them how much you earn every pay period and then show them how much things cost. Let them see how much a mortgage payment costs, the utility bill, groceries, and even how much they (your teenager) cost!

All of a sudden you may notice they are closing the door when the air conditioner is running and turning off the lights when they leave a room.

Save for Something Big (Ages 14 and Up)

A great lesson to teach your teenager while they’re still living under your roof is to save up for something big. This teaches them the importance of delayed gratification but also the power of work.

Life requires things that just cost more. Whether it’s a car, a down payment for a house, or a kitchen remodel — things cost a lot of money.

Instead of allowing your kids to fall under the mentality of you can have everything you want right away by taking on debt, instead teach them the power of saving up cash to avoid debt altogether.

You can also encourage your kids to save by giving them a match. Just like you may see with an employer’s 401k plan, offer your teenager an incentive to save. Maybe it’s a 1:1 match for a car — if they save $5,000 then you match $5,000. But, if they save $2,000, then you only match $2,000.

The idea here is to not only get your teen to save money, but to also get them to want to save money. Can you imagine how much different life would look and feel right now if you were taught to be a savings rockstar when you were a teenager?

Final Words

Your kids will eventually learn about money and it’s up to you to decide who they learn from and how they learn.

Will they learn about money from the next credit card commercial telling them they can have everything they want right now with a simple swipe or a tap to pay? Or would you rather them learn from you?

Your kids will learn about money somehow, and it’s best they learn from you starting today.

Chris “Peach” Petrie is the founder of Money Peach. Money Peach partnered with OneAZ to provide free financial education to members across the state. To learn more about OneAZ’s partnership with Money Peach, click here.

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