You don’t know if your children or grandchildren will grow up to be ballerinas or bankers, stay-at-home dads or globetrotters. But you can convey through your actions and words positive money messages that the kids can carry with them throughout their lives. Regardless of what they end up doing, your younger generations will then have a strong foundation that supports productive and financially fit lives.
THE AGE OF REASON (3 to 5 years old): It’s Not Too Early
Pre-schoolers learn by doing, watching, exploring. You can help them by: setting up situations for them to make choices; establish rules and boundaries; and explain how the world works. This lays the foundation for saving, sharing and spending later on.
Say and Do:
- Create “No” Moments — When shopping for toys, souvenirs or presents, ask the kids to choose just 1. Don’t rush. Let the kids think and talk about which item is best.
- “What is that person doing?” Talk about the work you see people doing around you.
Explain that jobs are ways to earn money and to help other people and society. - “How much is this?” — Let kids use coins/dollars to pay for small purchases, so money is not an abstract concept.
HANDS-ON HELPERS (5 to 8 years old): Keep It Real
School kids are full of energy and love doing things with parents, so this is a great age to lay the groundwork for lifelong habits. It is very important that you “keep it real” and hands-on.
Say and Do:
- Help them set up a “Share, Save, Spend” piggy bank system.
- Volunteer at a local nonprofit and take them with you.
- Help them start a scrapbook or list of things they are passionate about.
- Chose an item you buy often for them and have then keep track of how much it costs.
- Play board games that have major money messages (Monopoly Junior, Big Pay Day)
THE INDUSTRIAL AGES (9 to 12 years old): Teach through Example
Grades 3 through 6 are when kids love to be part of the action. This is the age when their money personalities really start to show. Yet they’re still looking mainly to you the parent for guidance.
Say and Do:
- Open a savings account for them and encourage them to deposit part of their cash gifts and allowance. Consider matching contributions.
- Discuss Needs vs. Wants vs. Goals when shopping together.
- Volunteer with your child at a local food bank or other nonprofit.
Make Work More Real:
- Assign regular chores. Don’t let children skip them.
- Help children explore and work on any money-making ideas they may have.
- Talk about work, finances in front of the children – be positive.
TEEN SPIRIT (13 to 15 years old): Focus on Actions, Not Words
Teenagers begin to define themselves independently from parents. And this opens up new opportunities. A strong base of positive financial experiences, taking into account their money personality, will prepare them to make smart decisions later on. Do not be afraid to ask your young teens to do these things.
Say and Do:
- Save for a goal – Encourage them to put away at least 10% of gifts, etc. to buy something costly.
- Start to earn money outside the home – Encourage them to babysit, rake, etc.
- Ask them to track how much they save/share/spend, however they want (apps, paper, etc).
- See that they signup to do volunteer work in areas that interest them, not necessarily you.
- Review with them their bank and debit card statements.
- Buy shares of stock in a well-known company they like and discuss the results.
INDEPENDENCE DAYS (16 to 18 years old): Test their Financial Fitness
The end of high school is a thrilling time. Teens this age want and can handle a fair amount of responsibility and independence. So it’s important to stop doing things for them and instead act as their financial advisor.
Say and Do:
- Encourage working at least a little, especially when not in school – celebrate their 1st paycheck.
- Encourage them to save so they can cost-share – for things like a car expenses, education, trips.
- Help them compare college costs.
- Set up a trial period for the use of credit cards. Review the statements together.
COLLEGE & BEYOND (19 to 25 years old): Paying Their Own Way
This is when the values, habits and instincts you’ve worked to develop in your kids kick into gear. They are not yet fully adult but getting there fast.
Say and Do:
- Remind them of the 50/20/30 Rule:
→ 50% of income for fixed expenses – food, rent, transport, phone, etc.
→ 20% for savings toward major goals
→ 30% for “wants” – clothes, movies, dinner out. - Talk to them about their finances/investing.
- Encourage them to attend meetings with your wealth advisor.
- First Job? Emphasize 401(k) contributions, employer matches and Roth IRAs.
- Graduate school? Let them know whether, and how much, you’ll contribute.
Help them research work or loan options if you expect them to foot part of the bill.
Read the LNW guide to Raising Money Wise Kids.
