Teaching Kids About Money – Expert View on Financial Literacy

money for kids

Did you know that financial literacy is the most important skill nowadays? A lot of Americans earn enough money to be wealthy but they live in debt. Why is it so? Because nobody teaches this at schools or colleges. And this mission is transferred to parents.

Today’s article is an expert roundup on teaching kids about money. We asked the most popular questions about money for kids to a successful mom, personal finance expert, author of a financial literacy program for teens, and master teacher in financial education. Let’s check their answers together.

money for kids

Becky Beach

Becky Beach is a mom of a wonderful 6-year-old boy and is a 6-figure blogging business owner. She lives in the Dallas, Texas area with her family. Becky runs MomBeach.com where she helps moms find success and balance. She enjoys spending time with her son, creating digital products, and teaching others.

Brian Meiggs

Brian Meiggs is a personal finance expert, and the founder of My Millennial Guide, a personal finance site helping people make smarter financial decisions.

Neil Edmond

Neil Edmond is the designer and author of the moneytimekids.com program which is used to teach financial literacy to 10-14 years old globally.

Sam X Renick

Sam X Renick excels in financial education. He is a master teacher renowned for his work in financial literacy. He is also an expert at networking & lead generator. He thrives on connecting great people & causes.

How Young Should We Start Teaching Kids About Money?

Becky Beach:

I started teaching my son when he was 2 years old about how money works. The younger the better!

Brian Meiggs:

If you can, start your kids early when it comes to money matters. Some adults have very good habits about money and some don’t. If you have good habits, you should start teaching your kids about money as soon as they can understand.

You should teach them the value of a dollar and that they will have to work for it.

You should also teach your kids about people who have less money than you. This doesn’t mean the homeless man on the street who is panhandling. Teach your kids about friends and family members who live in a different place or even a different country where people make much less money than you do.

This way, they will value what they have and see how fortunate they are to be living in a country where there’s always food on the table, clothes to wear and a comfortable bed to sleep in.

Neil Edmond:

Children are able to understand the concepts of earning, saving and spending by the time they are five. From age 6, they begin to understand cause-and-effect relationships and that changes the way they perceive money. By this point, they are able to understand:

  • Items can have a value greater than or less than other items
  • People work for money
  • Needs are not the same as wants

Around age 10 they begin to develop a sense of reason, transforming from emotionally-driven to rationally-driven decision making. This is the time to expand their financial knowledge to include:

  • How paying interest on debt can make things a lot more expensive?
  • Why preparing budgets is the key to saving money?
  • How their money can be stolen if they don’t keep their details safe online?

In their early teens they begin to grasp abstract concepts and develop a sense of long-term consequences. This is a good time to introduce how investing (in property, shares and business) can improve their net wealth significantly over time without them having to work for it.

From a practical standpoint, it is around age 10-12 that most children start having a meaningful amount of money to spend, from their allowance or doing jobs. They are also starting to become aware of the power of money and the things they can do with it.

I believe this is the ideal time to build an awareness of how money works in the world and to develop good lifelong financial habits. You want to build good habits and positive attitudes when they are starting to make their own financial decisions.

Sam X Renick​:

Parents should start “consciously” teaching their children about money while they are very young. Young, in this case, means between ages 3 and 7. Parents want to be aware that kids are learning, observing, and mimicking machines.

While children may or may not be able to articulate what they are learning, parents can be certain kids are acquiring attitudes, associations, feelings, and habits on money. That acquisition process begins at birth. And those early acquired attitudes, associations, feelings, and habits can stick with and run kids for the rest of their lives without them even knowing it.

Frequently this results in a pattern of poor personal financial choices that place at risk one’s financial security and freedom.

What’s the Difference Between Teaching Children About Money by Age Group?

Becky Beach:

For preschoolers and elementary school kids, you can teach them with coins and dollars. When they are good or do chores around the house, they will get the money in their piggy bank. After they save $5, you can take them to a store like 5 Below to purchase a toy.

For older kids, you can teach them with a debit card or checkbook. I plan to open up an account for my child when he is 13 so he can balance a checkbook and use a debit card.

Sam X Renick​:

I have found key differences between age groups relate to use of language, topics, and the time allocated to teaching each topic. Repetition and practice are keys to competency.

Critical financial subjects parents should make certain their children understand are saving, smart spending, earning, giving, investing, and smart borrowing. Parents can incrementally introduce these topics to kids at a beginning level when they are young. Then, as they deem appropriate, parents should go into more depth and add topics.

Where Can Parents Get Information About Teaching Their Kids About Money?​

Becky Beach:

There are lots of blog articles out there for free online. They can also watch YouTube videos on the subject. I suggest reading books like Redefining Financial Literacy and The Millionaire Next Door.

Sam X Renick​:

A wealth of resources exist to help parents teach their children about money. Searching the internet is a good place to start. Libraries, bookstores, and personal finance magazines can also be excellent sources of information.

Parents may want to begin by visiting these websites: SammyRabbit.com, Federal Deposit Insurance Corporation (FDIC), MyMoney.gov, Consumer Financial Protection Bureau (CFPB).

Could You Recommend Any Financial Literacy Program for Kids?​

Becky Beach:

InCharge.org is a great site with financial literacy content for educators and parents.

Neil Edmond:

I’m the author of MoneyTime which you can find at www.moneytimekids.com. MoneyTime is a gamified online financial literacy program specifically for 10-14 years old.

It incorporates 30 self-taught modules and automatically marked quizzes, covering the full spectrum of personal finance; from earning, saving and interest to borrowing, investing and business.

It is fun, engaging and highly interactive, with children having to solve problems regularly throughout the modules. They are rewarded with money for each correct answer to spend on avatars and investments within the program, which builds confidence in making their own financial decisions.

There is a strong emphasis on them having to choose between spending, saving, donating and investing – just like they will have to do in real life.

There are also 13 modules designed specifically for children to do at home with their parents. These serve to revise and reinforce the classroom modules and put the learning into their family context. They are a fun way for parents to interact with their children.

Sam X Renick​:

Naturally for young children, we recommend SammyRabbit.com. Smart Learning Solutions offers the Seedling Financial Education App for middle schoolers. The FDIC offers Money Smart for Young People for high school and college students. The good news is plenty of wonderful options available exist.

What Are Your Favourite Financial Literacy Activities for Kids?​

Becky Beach:

I like having my child learn how to count money by using either real or fake coins and dollars.

Brian Meiggs:

The sooner you start having conversations around money with your kids, the better it will be for their future. Your input could help them develop healthy financial habits as they grow, like living on a budget instead of living beyond their means.

A good place to start would be to open a prepaid debit card for your child in their name. It’ll give them a chance to learn about money management and develop healthy behavioral patterns around money. Under your supervision, they’ll receive guidance on the best practices when handling their finances and learn the ins and outs of operating a checking account.

Neil Edmond:

Setting them chores each week, paying them cash at dinner time each Sunday for the ones they have completed, then talking with them about what they are going to do with their money.

We also take this time to talk about financial decisions we are making at the time – what money is coming in, what bills to pay, what we are saving for, what we are investing in. This helps them appreciate the value of money, how to prioritise needs over wants and how to plan for the future.

Sam X Renick​:

Some of my favorite financial literacy activities for kids include:

  • reading storybooks;
  • listening to songs and videos on money like Get in the Habit;
  • playing games;
  • creating personalized individual and family savings jars;
  • journaling;
  • having kids participate in daily or weekly living activities like grocery shopping;
  • having periodic family money meetings;
  • giving kids earning opportunities;
  • reviewing budgets and account statements together.

What Financial Literacy Games for Kids Do You Use?​

Becky Beach: 

I have the Cashflow for Kids board game at home that my son really loves playing!

Sam X Renick​:

Classic games like Monopoly, Moneywise, Payday, Life, and the Allowance Game will help catalyze conversation and provide personal finance teaching moments. Online games like those at ABCya, Cash Crunch Games, U.S. Mint Coin Classroom, Visa’s Practical Money Skills, and Nex Gen Personal Finance Arcade will do the same.

Financial Literacy Books and Videos for Kids Parents Should Pay Attention To:​

Becky Beach: 

Redefining Financial Literacy and The Millionaire Next Door (choose audiobooks, they are free).

Neil Edmond:

Rich Kid, Smart Kid by Robert Kiyosaki is an early benchmark and I highly rate Scott Pape’s The Barefoot Investor For Families. If you want to be hands on getting your child to develop good attitudes towards money from their early years, you can’t miss with Scott’s down to earth, common sense advice.

Board games put learning into a game situation and can make what is potentially an intimidating topic into something fun. Monopoly, Poleonomy, Life and Cashflow for Kids (Rich Dad, Poor Dad) are well-known classics.  Monopoly and Life having digital versions available for those with gaming consoles.

Sam X Renick​:

There is an abundance of books and videos for parents to pay attention to that will help make it easier for them to talk to and teach kids about money. For kids 3 to 8 check out Sammy Rabbit stories, songs, and activities at www.SammyRabbit.com.

Every family should listen to the song Get in the Habit! For kids 9 to 12 check out the Seedlying Financial Literacy App at www.imarsolutions.com.

For teens check out Chad Foster’s, Financial Literacy for Teens; David Bach’s The Automatic Millionaire; and Ramit Sethi’s, I Will Teach You to be Rich!

To increase parents’ knowledge and skills on teaching kids about money, they should check out Janet Bodnar’s, Money-Smart Kids and James Stowers, Yes, You Can! Raise Financially Aware Kids!

What Are the Steps to Teach Kids About Investing and How to Keep Their Attention?​

Becky Beach:

Invest yourself so kids can see you doing it. If you just tell them they should invest without doing it yourself, it won’t be as effective. Sit them down and show them how your money has grown with your investment. You can have them play TD Bank’s Stock Market Game as well!

Neil Edmond:

Get them a Savings account as soon as they are old enough for one. Set up a share trading account in their name and encourage them to start investing with small amounts. See this article for recommendations on the best share trading apps.

Sam X Renick​:

Have teens or kids who are ready to learn about investing do some or all of the following to get started:

  • Watch videos like those produced by Easy Peasy Finance. Rishi, the site’s founder, started investing at age 7 or 8
  • Visit FINRA’s Young Adult and Investing web page
  • Listen to videos featuring well-known investment experts like Warren Buffett and Ray Dalio
  • Read books like J.J. Wenrich’s Teaching Kids to Buy Stocks or the Motley Fool’s Investment
  • Guide for Teens and Parents with Teens
  • Join an investment club like the Young Investors Society
  • Visit investment websites like Stash and Acorns

What Daily Activities Help to Develop Kid’s Smart Spending Decisions?​

Becky Beach:

Show kids the value of money by using the cash envelope system yourself. If your child sees you pay for everything with a “magic” card then they won’t learn to value money. I like to show my child the money that I am paying with at the store.

Neil Edmond:

Take them grocery shopping with you. Give them a shopping list and a budget and get them to work it our for themselves (giving them a hand if they need it and a treat if they come in under budget).

Sam X Renick​:

Parents can use trips to convenience stores, gas stations, grocery stores, banks, shopping malls, restaurants, going to the movies, etc., to have short discussions on smart spending habits.

They can have kids make daily to-do lists, clip coupons, search the internet for coupons, and to do price, brand, and quality comparisons. Parents should also do as much as they can to limit kids’ exposure to advertising vehicles like television, the internet, and cell phones.

Turn them off or have strict guidelines regulating their use. Sammy Rabbit and I also believe having dreams, goals, written spending plans, budgets, and making saving a habit as well as a priority will help kids and everyone make better spending decisions.

What’s Your Top Tip to Teach Kids Good Money Habits?​

Becky Beach: Give your kids an allowance for doing chores, getting good grades, or good behavior. They can then save up their money for a toy at the store. We like going to 5 Below to buy cheap toys that are $5 or less.

Brian Meiggs:

If you want to teach them about money, the first question is what will work for them? There are so many different opinions out there, and what works for one person might not work for another.

Some children learn better by doing activities versus watching videos, so find tips that work for your child. I believe that you should teach your children about money by showing them what you’re doing.

Show them how to save and spend and reward them for good behavior or responsibility. Parents can prepare their children for the real world and share with their kids the importance of saving up (for example) instead of rushing out and spending their money.

If you want to teach your kids about personal finance, start by setting a good example yourself! Be patient and don’t forget that there are plenty of free resources available on the Internet for parents who want to teach their children about money.

Neil Edmond:

Kids both consciously and unconsciously learn from their parents’ financial behavior. Practice financial self-discipline yourself and you’ll be amazed at how this behavior will rub off on them.

Sam X Renick​:

My top tip for parents to teach their kids good money habits is to have their children get in the habit of saving money at as young an age as possible. Here is why. Saving has multiple benefits. It is a cornerstone upon which many other money and success skills can be taught.

Saving teaches discipline, delayed gratification, preparedness, planning and goal setting. Saving protects us from poor spending choices. Saving positions us to invest with less risk. Saving provides more freedom and choices. Saving builds confidence and character.

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