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When Can You Start Teaching Your Kids About Money?

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When Can You Start Teaching Your Kids About Money?


As a kid, I modeled my parent’s behavior with money. But, since money wasn’t discussed as openly back then, I didn’t have a ton to go on. While my parents did a pretty good job teaching my brothers and myself more about money than most of my peers, there were still definitely some gaps in my education.

As a parent myself now, I want my children to be more financially savvy than I was at their age. Hopefully, by doing so, I am helping them create a sense of independence and power over their own financial future. Since I realized that children are like little sponges, I began to teach them about money as soon as I possibly could. 

When can you start teaching your kids about money?

When Can You Start Teaching Your Kids About Money? - When Can You Start Teaching Your Kids About Money?

Even when kids are very small, you can still begin to begin teaching them about money. When kids are toddlers, they are extremely inquisitive and have a strong desire to learn. It is also during this timeframe that they begin to strongly model your behavior.

So, it makes natural sense to begin introducing them to the idea of money when they are in this frame of mind. Around this age, I began teaching my children about money in a few different ways:

  • Taking them to the grocery store to look at the price tags.
  • Having them tell me how many fingers something cost.
  • Showing them the different ways you can pay for groceries (credit/debit card, cash, check, EBT card).
  • Buying a play cash register and plastic food to have pretend grocery trips at home.

If you start with basic lessons and pretend play like this, then building on this financial foundation is much easier as your child ages.

The benefits of teaching your kids about money

When Can You Start Teaching Your Kids About Money? - The benefits of teaching your kids about money

The benefits of teaching your kids about money are almost endless, especially in today’s society where most of us have more debt than income. If we can begin teaching our kids about money when they are really young, then they will grow up knowing more than we did. By doing so, hopefully they won’t make as many of the financial mistakes we did.

The value of a dollar

One of the biggest, and easiest, lessons to teach your children about money is the value of a dollar. This lesson can begin with the grocery store example from above. A good way to do this, depending on their age, is to tell them how much money you have budgeted for this particular grocery trip. Then, they can help you add up all of the items as you go.

When kids do this, they get to see a physical example of how much groceries really cost. Once this concept is grasped, the next step is to give them a small amount of money to spend on their own. Starting with $1 or $2 to see how far that little bit of money doesn’t actually stretch. 

How to save for long-term goals

Opening up a savings account (I love Chime, since it offers a generous 0.50% APY) for your kids is a great way to help them begin to save for long-term goals. When they are younger, they won’t have access to withdraw funds themselves, so you will be in charge of what they can take out.

A good way to drive this point home is to have them choose something big that they would like to save for. Some items to consider may be:

  • Bike.
  • Skateboard.
  • Video games.
  • Gaming console.
  • Phone.
  • Furniture.
  • Trip.
  • Car.
  • College.

Once you and your child have chosen their big item, then you can help them break down the total cost and how long it will take to save the money to get there. The deal is that they won’t be able to take the money out of the savings account until they have the full amount due for the item.

This can really help keep them laser-focused on the big goal and hopefully get them interested in finding other ways to make money as a kid.

What disposable income really means

As kids get older, they start to understand a bit more about bills and how much things cost. Teaching them about monthly recurring living expenses is a really good lesson to impart before they fly the coop. I know my first years as an adult were spent living hand to mouth and eating the cheapest foods I could find. This was because I had little to no money since almost everything I made went to living expenses.

Teaching your kids about what disposable income really means is exceptionally important. This message can be taught in a few different ways. But, a great way to show them is to have them go through your budget with you. This way they can see what your recurring expenses are, as well as any remaining money. 

How much retirement might cost and how to save for it

When it comes to retirement, I suggest telling your kids to include this number in their monthly recurring expenses budget. This way they will be sure to put something away towards retirement every single month.

How much retirement costs will vary depending on where your child chooses to live and what they have planned for their retirement. This conversation will look different depending on the ages of your children also. No matter their age, even if they are saving only $50 per month, they will be well on their way towards retirement

This will be extremely helpful to them due to the magic of compounding. If only I had known about compound interest when I was a teenager. Oh, how I would have made different financial choices!

Overall financial independence

The biggest benefit your children will get out of you teaching them about money at a young age is the ability to achieve financial independence. This is a big one! Especially because a lot of us, as parents, haven’t even achieved this. 

Since we want our children to live a better life than we did, helping them to achieve financial independence only seems natural. And one of the best ways to teach them that is to get them involved in making their own money as kids.

How your kids can put their hard-earned money to work for their future

When Can You Start Teaching Your Kids About Money? - How your kids can put their hard-earned money to work for their future

Once your kids start earning some of their own money, there are many things they can do with it. Of course, they could spend it on a lot of things they may want right now. But, it makes much more financial sense for them to put their hard-earned money to work for their future.

There are a few different ways you help them learn this lesson. Some of my favorite options (and we have done all of these) are:

  • Put money into a high yield savings account High yield savings accounts can range in the APY, but they are always higher than your typical brick and mortar savings account. Some of our favorite options are the CIT Savings Builder and Chime. Once you set up the account for your kids, you can help them put money into the account each time they get paid. 
  • Open an investment account – Helping your kids open an investment account is a great way to teach them about the stock market. This is especially true while they are younger when the stakes aren’t as high with regard to them losing massive sums of money. One of our favorite options is Public, since it gives us a social aspect to investing, and actually makes it fun!
  • Put gift money into a UTMA account – When the kids are getting money gifted to them for holidays and birthdays, they should put it into a UTMA account. You can set these up as custodial accounts which will then be rolled over to them once they turn 18. These types of accounts let you help your kids choose which ETF’s and/or mutual funds they want to invest in after they have deposited the money into their UTMA account. The accounts we opened for our kids was with Fidelity because of their fund diversity.
  • Invest in a Roth IRA with their earned income One of my favorite retirement savings vehicles for kids is a Roth IRA. However, your kids must have earned income in order to contribute to one. These types of accounts can be opened as custodial accounts, just like the UTMA accounts. You will deposit your kids’ earned income into the account and then they, or you both, can choose what they would like to invest in. This has become one of our favorite financial games around our house since our kids like to see whose investment choices are performing the best. Some of our favorite options for Roth IRA’s are Fidelity, Vanguard, and Charles Schwab. Not all investment firms offer custodial Roth IRA’s, so your choices here may be a bit more limited than opening a Roth IRA account for yourself. 


Teaching your kids about finances when they’re young can only increase their lifelong financial literacy. And even if you don’t know everything about finances yourself (who really does?), this is a great time to learn alongside your child.

The younger you begin to impart these lessons, the stronger their financial foundation will be. So, start teaching your kids about money as early as possible!

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