What Age should you start Teaching your Kids to be savvy about Money and how to do it!

Five years old? Ten? Twenty? Maybe even at birth? Some parents are saying they are still learning themselves and that is ok, we all heard the saying…it’s never to late to start saving. But how early can you start teaching your kids and have them actually comprehend it?

The answer…as early as three years old. Now at three your child won’t know how to add coins up to equal a dollar but they do understand what “money” is. They see you handling money (or a form of money) at the grocery store to “spend” and hopefully sees you go to a bank (or some form of a financial institution) to “save” money such as the money they receive as gifts for their birthday. So the relationship with money has already started at an early age…don’t think it hasn’t. A great way to start engaging your kids and help them become money savvy is to incorporate money decisions with them.

For a three year old you can start “bartering” with them. For example, if they want a new toy suggest they need to give you two old toys to “buy” the new toy. By doing this it helps them understand they need to give up something of value to receive value.

For children in junior high you can now start to teach them to “manage” money. When they get birthday money or start receiving an allowance have them open an account where can they “deposit” those funds. When they want to buy something they are now old enough to calculate and see if they have enough. You can show them how to withdrawal the dollar amount needed to purchase what they want. At this stage your child should understand the importance of saving, either for short or long term goals. Make sure you are helping them manage their money and “plan” accordingly so they can accomplish their short and long term goals. (More on this coming out on the June 1st lesson.)

High-school, time of high fashion (if not already in junior high) and college cost around the corner. They now can legally work and start saving (and spending) a lot more. Hopefully in junior high the “manage” stage has settled in nicely as the foundation for what's to come in the high-school years. Determine with your child the things that they are responsible for and what you are willing to pay for early on such as gas for the car, insurance for the car, high-school dances, dates, and college expenses to name a few. Whatever you decide make sure you stay consistent! These are the last four years you have to make an impact on your child’s finances before they leave for college or move out of the house. By setting these boundaries your child will know how much money they need to set aside and save in order to buy the things they want well in advance of them happening. For example, if you told your child you will only pay for half their car insurance then they know what the bill is and when it is due and how much they need to have in the bank to cover the cost. Sit down with them and continue to help “manage” their account as their income and outcomes (deposits and expenses) become greater.

During high-school start talking about college and what each persons financial expectations are. Research colleges together and work as a team to come up with a plan as how this expense will be paid. College is becoming more and more expensive and kids are taking on a lot of debt once they graduate. Educate your child about this, talk about it, help “manage” these accounts and come up with a solution. (More on lessons to teach a high-school graduate in the July 15th lesson.)

To sum it up, to help your child become financially savvy start early and include them in family decisions (appropriate to their age) to teach real world money examples.

Save your coins, Susie Saver

P.S. Email Susie and tell her what you want to learn about at: susan@susiesaverbooks.com

Financial planning lessons are posted two times a month. Next lesson on, “Todays Electronic Banking systems…do Kids understand it?”