It may seem like kids are too young to grasp all the ins and outs of managing money – saving, credit, budgeting. But that’s not true. There are lots of activities you can use to steadily introduce kids to financial concepts in a way they’ll understand, ensuring they build strong financial habits early.

6 ways to teach kids good money habits

Ages 4-8

Young kids may not be ready for complex financial concepts, but it’s a great time to help them learn the basics:

Set up a savings jar

Do your kids get birthday money or an allowance? This is a great opportunity to help them build strong saving habits. To do this, give them a piggy bank or savings jar and encourage them to deposit money rather than spend it. For kids this age, a quick savings goal, like buying a toy, often works best as encouragement. It also helps if you offer lots of positive reinforcement about how well they’re doing.

Concept learned: Delayed gratification

The ability to resist the desire for an immediate reward to get a bigger one later.

Give them a treat budget

Be it a toy or a snack, we all know kids love treats. You can use this to teach them about financial choices. When they come shopping, try giving them a small budget (say, five dollars) and letting them decide what to buy. With these limited funds, if they choose a chocolate bar, they likely won’t have enough for a toy this time. This is a gentle, easy way to help them learn about the budgeting trade-offs we often make as adults.

Concept learned: Opportunity cost

The understanding that buying one thing may mean you miss out on the opportunity to buy another.

Ages 9-12

Kids this age have a better understanding of money and are likely ready to learn more practical financial lessons:

Match a percentage of their savings

This could be seen as the next level up from the savings jar. The first activity helps teach the power of saving to reach larger goals. This one not only encourages kids to continue building that savings habit, but also teaches them how compounding interest works because the more they set aside, the more you contribute and the faster they see their savings grow.

Concept learned: Compounding interest

The power of earning increasing interest on savings over time.

Pay them for chores

Money doesn’t grow on trees, but to kids it can sometimes seem like it. That’s why it’s important to teach them the value of money. One way to do this is by making them earn the money they receive. So, if your kid wants an expensive gadget, don’t simply buy it for them, let them earn it by doing chores around the house, like vacuuming or mowing the lawn. The result – they learn an important financial lesson and you have less to do. Everyone wins!

Concept learned: Earned money

The understanding that money is earned rather than received.

Ages 13-18

At this age, kids are likely becoming more independent and will benefit a lot from learning the fundamentals of managing money:

Open their first bank account

Handling physical cash is a great way to learn money management. But opening a bank account creates a wealth of important learning opportunities. You can show them how to:

• Securely use digital banking and debit cards
• Deposit and withdraw money from ATMs
• Track account balances and spending
• Understand overdrafts and transaction fees
  
  

Having a good grasp of these skills will be invaluable as kids get older, start jobs, and become more financially independent.

Concept learned: Money management

The ability to take care of your finances.

Talk to them about credit

Credit is something many of us don’t learn about until we’re adults. Yet it’s a crucial part of our financial health. So, before kids leave the nest, sit them down and make sure they understand:

• What a credit score is and how it’s determined
• What the difference is between a debit and credit card
• How to use credit cards and other lending solutions wisely

If your older teen has demonstrated a responsible attitude to money, you could also consider adding them as an authorized user on your credit card. This will help them start to build credit, while also learning to manage a credit card with your guidance.

Concept learned: Credit management

The ability to responsibly manage credit and debt.

Teaching kids about money ensures they’re ready to make good financial choices in the future. But fun activities and important conversations aren’t the only way to achieve this. As adults, we’re our kids’ biggest role models. So, to make sure those key financial lessons stick, it’s important that we grow our financial health too. So, why not try our new myFinHealth portal? It has lots of tools, courses, and fun money quizzes to help you build your financial skills – and, if you want one-on-one, personalized support to optimize your finances, our experts are here to help.