What kids need to know to grow financially

Preparing kids at an early age to learn how to grow financially smart will help them become successful adults.

When is a good time to start talking to youth about money? In this article, I’ll give a general overview by age groups of what age to start and what to say. Material is referenced by Money as You Grow by Beth Kobliner. When parents, grandparents, aunts and uncles give money to your child on birthdays, holidays or special events, what do you teach your child to do with the check, savings bond or cash?

Earlier years is when a piggy bank can get them excited about saving. Have younger kids feed the piggy bank. As they grow, the piggy bank can grow in size. Once it is full, together count the coins and have a discussion on what to do with the money.

3-5 years old

  • Identify coins and their value. Start to identify what are the costs of their favorite items such as ice cream, clothes and toys.
  • Describe your job to your child. Walk through your neighborhood or downtown and talk about people and their jobs such as a bus driver, police officer or someone who owns a business. Encourage youth to think about earning money.
  • Tell your child that you can’t always get that toy or candy, but suggest waiting to buy something they really want. One way to show saving, spending or waiting for things is to have three jars listed with saving, spending and sharing. When a child gets some money, have them put some in each jar and then they can buy something when they have saved enough.

6-10 years old

  • Youth are starting to make choices. When grocery shopping, explain why you pick one item over another due to cost, ingredients, etc. Give your child some money and let them choose what fruit to buy. When shopping, ask your child if they could find it cheaper or if they really need it.
  • Compare prices before you buy.
  • Visit a credit union or bank, open a savings account and talk about interest, how much to save, how the money is protected and how they will get it back.

11-13 years old

  • Encourage saving at least 10 percent of the money they get. Work with your child on setting goals for spending. Consider a matching plan for your child’s savings. For every $1 they save, you contribute so much. Have them go to the bank with you and show them how their money grew.
  • Start discussing credit cards, debit cards and online banking and the risks involved.
  • Youth might start working at this age, so you really need to sit down with them and discuss saving, spending, wants and needs.

14-18 years old

  • First paychecks seem smaller than what they planned on. Now is the time to talk about gross pay, net pay, taxes, etc.
  • College or after high school plans should be discussed early on so youth can start thinking about costs, savings and careers.
  • Discuss only using cash—you can only afford what you can pay for and avoid the credit card use.
  • Talk about the Rule of 72—to estimate how many years it would take to double your money.

To find out more on financial topics to help you work with your children, please visit Michigan State University Extension’s Youth Money Management. There are many resources that can help you talk about financial literacy personally and professionally.

Michigan State University Extension and the Michigan 4-H Youth Development program help to prepare young people for successful futures. As a result of career exploration and workforce preparation activities, thousands of Michigan youth are better equipped to make important decisions about their professional future, ready to contribute to the workforce and able to take fiscal responsibility in their personal lives.

To learn about the positive impact of Michigan 4-H youth career preparationmoney management and entrepreneurship programs, read the 2016 Impact Report: “Preparing Michigan Youth for Future Employment.”

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