Five Proven Money Skills for Your Kids/Teens
Many parents think that just talking about money is enough to prepare their kids for a successful financial future. But research from Arizona State University says otherwise: merely discussing money with your kids doesn’t directly translate into better financial outcomes. It’s about putting financial concepts into action that truly make a difference.
By the age of 10, a child’s financial mindset is largely formed. We know it is primarily influenced by what they see and do. This means starting early is crucial, but the real focus needs to be on hands-on experiences. Conversations are a starting point, but they need to be paired with practical lessons.
What Is Financial Literacy, Really?
Financial literacy goes beyond knowing terms like “budget” or “savings.” It’s about taking that knowledge and applying it, making actual decisions that influence your financial understanding. This could mean anything from going to the bank to participate in their money being deposited to planning how to spend birthday money wisely. Simply put, it’s about doing.
This concept of financial literacy is especially important for kids and teens. The earlier they start, the more time they have to develop a healthy relationship and practical skills with money. Think of it like riding a bike, no matter how many times you explain how to balance, they won’t learn until they get on and try it themselves.
Five Proven Ways to Teach Money Skills to Kids and Teens
- Involve Them in Banking: Kids should have their own savings accounts early on. While you might handle the deposits at first, take them to the bank with you. Let them see the process and understand what’s happening. It makes the whole process feel real and less abstract.
- Simplified Budgeting from Age 13: A 13-year-old can handle a simple zero-based budget with their allowance or income from small jobs. Teach them to give every dollar a job. This way they’ll learn the power of telling their money “what to do” at a young age.
- Concrete Long-term Spending Goals: Avoid vague goals like “saving for college.” Focus on more immediate, tangible goals, like a video game or spending money for an upcoming field trip. These goals are easier to understand and will motivate them to stick with a spending plan. If you kids can get excited about it, I have found that they will be much more willing to do it!
- Encourage Responsibility: Let your kids manage their spending (with a set balance if that makes you more comfortable). For example, give them a debit card for school supplies (there are bank accounts that exist without requiring fees attached to them!). When responsible for their choices, they quickly learn to prioritize and manage their money.
- Let Them Learn from Mistakes (KEY!): Watching kids make money mistakes or choices you may not completely agree with is hard (I know this from experience), but it’s a very valuable learning experience. If they spend all their money on a toy they don’t end up liking, they’ll understand the consequences. Minor consequences now can have a powerful impact on them later. I promise! These small lessons will help build good habits early on.
Final Thoughts: Action is Key
While conversations about money are important, it’s the doing that shapes a child’s financial future. Involve them in budgeting, spending, and managing their own finances. When kids get hands-on experience, they develop true financial literacy.
Want more tips for teaching your kids about money? Join my “Tips and Tidbits” email group for advice that makes managing money easier for the whole family.
