Money Management Topics by Age

Not sure how to teach your child financial responsibility? This guide should give you some great ideas based on the age range of your youngster.

Starting as early as age 3, children can begin to pick up basic financial concepts like saving and spending from their parents, teacher, peers, and even media and advertising. And by age 7, according to one study, kids’ money habits are already formed.

But with so many important money management lessons to learn, how are parents or teachers supposed know what to teach their child and when?

One invaluable resource for parents or teachers in this predicament is an educational website called Money as You Grow, an initiative of the President’s Advisory Council on Financial Capability which provides age-appropriate lessons and activities to help teach your children how to be financially smart at any age.

Here are some key takeaways from the site:

Ages 3-5

It’s never too early to start teaching children about money management. In fact, giving kids money lessons while they are still young and impressionable can be a critical launching pad for teaching them more complex financial concepts down the road.

One important lesson children in this age group can grasp is ability to delay gratification. Infants have no concept of having to wait for something they want, but at this age kids can start being taught that if they if they want a toy, for instance, they may have to wait and save in order to buy it.

Other financial milestones for children in this age range are:

  • Understanding that you need money to buy things
  • Money is earned by working
  • That there is a difference between things you want and things you need.

Ages 6-10

By the time your child turns 6, you should consider including them in some of your financial decisions so that they learn other key lessons, such as: You have to make choices about how to spend your money. This is the time when kids can be taught that “Money doesn’t grow on trees,” and you have to make wise decisions in order to save it.

One way to teach children these concepts is by getting them to help you compare prices of items at the grocery store and look for deals or coupons. Which is the best deal? Which is cheaper per ounce? Your youngster will think it is a fun game and you will gain a shopping helper—win-win!

Here are some other money milestones for kids in this age group:

  • Distinguishing money – they should know the difference between a nickel, a dime and a quarter
  • Counting change – they should be able to count out correct amount of money to buy something and know how much change to expect back
  • Start receiving an allowance
  • Start a coin collection and learn some basic concepts of gold and silver bullion investing, such as inflation, depreciation, and intrinsic vs. extrinsic value.

Ages 11-13

At this age, it’s time to teach your child that the sooner they start saving, the faster their money will grow because of something called “compound interest.” Their piggy bank may have been good for saving money when they were in elementary school, but now that they are getting older it’s time to go from thinking short-term to long-term.

Some ways pre-teens can increase their financial responsibility is:

  • Create a savings plan to achieve a long-term goal (for example, saving money for summer camp or new gaming system).
  • Open a savings account (if they haven’t already) and start learning about compound interest.
  • Donate to charity to learn about the value in giving to worthy causes.

Ages 14-18

By the time your child becomes a teen, they should already have a solid knowledge base about saving and spending. They should also be familiar with compound interest and saving for a rainy day. Now, before they leave the nest and become financially independent, now is the time to teach your high-schooler a few final money lessons, such as:

  • Planning for college. When comparing colleges, tuition and housing costs should be a factor.
  • Getting a job. Nothing instills the value of money more than having to work for it themselves.
  • Learning about investing. Even if they don’t have the money to invest yet, they should start becoming familiar with what certain investments can do for them in the future, such as a Roth IRA.
  • Understanding what a budget is and how to allocate their income appropriately.
  • Know what taxes are and how much is taken from their paycheck.
  • Avoid using credit cards to buy things they can’t afford to pay for with cash.

Even after your child leaves your home and starts their own life, they may occasionally come to you for advice on money. Money management is a lifelong learning process, but instilling these core concepts in your child at a young age will help better prepare them for overcoming greater financial challenges in the future.

Visit the Money as You Grow website for ideas on how to turn these and other money lessons into fun activities for you and your child.