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Talking to kids about money can be a difficult conversation to begin. Especially when we may have missed early financial education, it's hard to feel like qualified financial educators ourselves. So, when's the right time to start teaching kids about money? And what should these conversations focus around?
From compound interest and investing, to knowing when and how to take out student loans, to understanding insurance, to learning to budget, and much more... financial literacy is much more than a math lesson. It's important we teach students healthy financial behaviors as they grow up that empower them to become successful financial leaders and advocates for themselves.
Since financial stability is a journey that should start young, we’ve put together a guide on what children should know about money at each age. Don't forget - many life lessons happen right at home, in the classroom, or in the car ride in-between. As you read, think of ways you can bring these ideas to life in your everyday life.
Ages 3-5 (Pre-K)
At this age, children are beginning to understand and recognize money. You can begin by teaching them the value of coins and bills and how to count them. You can also introduce basic financial concepts like spending, saving, and earning.
A few ideas, topics, and activities include:
What it means to spend money versus saving it
The value behind and how to recognize coins and dollars. Try out a coin sorting activity or exploring multiple ways to form $1.
Why we save money and the value of a rainy day fund
Ages 5-8 (Early Elementary)
At this age, children are now starting to understand what money is – and its value. Money moves through our economy every day, but start with recognizing it in your community – from your neighbors, local banks, grocery stores, and shops.
A few ideas, topics, and activities include:
The idea that you have to choose what to spend money on
The difference between wants and needs
Jobs people in your community have and why they picked them
Visit a bank and open a savings account
Allow them to pay for something themselves even if they may be disappointed by the purchase
Where are safe places to keep money
How the government spends taxes to contribute and provide community services like roads, social security, and more
Ages 9-11 (Upper Elementary)
Now, children can now start to understand more complex financial concepts. They can understand what spending looks like across different methods. You can also introduce the concept of philanthropy and show them how they can give back to their community through volunteering or donating.
A few ideas, topics, and activities include:
How people make money: wages, salaries, commissions, and tips
Sales tax and why some purchases are more than the price tag
What influences spending choices, including price, peer pressure and advertising
How you use different payment methods, but they all transfer money (using a card or your phone doesn’t mean you didn’t pay!)
The concept of insurance and the financial risk of an unexpected event occurring
How banks and credit unions make money on your money by charging an extra fee for loans
Credit scores and how they influence your financial future in qualifying for loans, banking, and more
Ages 12-14 (Middle School)
As they enter their teenage years, you can explore more advanced financial concepts.. This is a good time to explore different ways to manage money, from opening accounts to using credit. A good first activity is to make their own personal budget with money earned to accomplish savings goals.
A few ideas, topics, and activities include:
The costs of education and skills building (tuition, time, etc.) and how experience can influence job and salary opportunities
Entrepreneurship as opposed to being an employee and the potential risks of a business venture (working for yourself, no benefits)
Net income compared to gross income and how we can calculate our take-home pay
Additional taxes on investments, self-employed income, and other earnings
Taking out loans and what borrowers have to pay to banks
Different savings options like checking accounts, savings account, high yield savings account, CD’s
Earned interest (savings account) versus Paid interest (credit cards and loans)
Compound interest is calculated by multiplying the original amount and previously earned interest – good for earning not for owing!
Insurance and the terms that contribute to costs (premium, deductibles, and copayments)
Ages 15-18 (High School)
Almost at adulthood, you can teach the specifics behind earning income, allocating it, and what all those numbers on their paycheck mean. This is a good time to explore the world of work and help them with thinking about their future career goals. You can also teach them about taxes, how they will need to file their taxes each year, and how to calculate what they will owe based on tax forms.
A few ideas, topics, and activities include:
How to build credit and responsibly borrow money to build and maintain a good credit score
How to spot scams and fraud and that they are responsible for any corrections to their credit history
How to buy a car and the hidden costs associated with it
Calculating a mortgage and what you need to buy a house
How to talk finances with a friend, roommate, or partner
Different savings goals: emergency fund, rainy day, vacation, car, etc.
Non-financial benefits to a job like working conditions, time off, commuting hours
Changes in the economy and labor market can affect career opportunities and employment
Inflation and the erosion behind the value of the dollar
Tax brackets and how the amount people pay depends on their income and type of spending
Retirement income and growing it from employment earnings and benefits
What it means to take out student loans and how you’ll pay them back
The benefits of applying for scholarships, grants, work-study, and more to help pay for higher education
Federal student loans have lower rates and more favorable repayment terms than private student loans
Financial literacy is an important skill for everyone, but it’s especially important for kids as they grow up and begin to make their own financial decisions. By teaching them early on, we can empower them to make their own healthy financial decisions in the long-run.
Visit us at fitmoney.org to find the right financial literacy program for you, such as our new $uperSquad program for elementary schoolers or the Financially Fit Certificate program for elementary and high school students.
Not sure where to start? Join FitMoney in the Fit in 5! Challenge to begin your own family or classroom's financial literacy journey in a checklist of five days.