A report by researchers at the University of Cambridge revealed that our money habits are formed by age seven. “The sooner parents start taking advantage of everyday teachable money moments (for example, give a six-year-old $2 and let her choose which fruit to buy), the better off our kids will be. Parents are the number one influence on their children’s financial behaviors, so it’s up to us to raise a generation of mindful consumers, investors, savers, and givers,” says Beth Kobliner in a Forbes article. Kobliner is a member of the President’s Advisory Council on Financial Capability and one of the creators of the excellent and highly practical Money as You Grow, which offers age-appropriate money lessons and activities for children based on their age group. Here is a glimpse of the top money lessons for each age:
- Ages 3 – 5: You have to wait to buy something you really want
- Ages 6 – 10: You need to make wise choices about how to spend your money
- Ages 11 – 13: The sooner you save, the faster your money will grow from compound interest
My favorite piece of advice: “You should save at least a dime from every dollar you receive.” A piggy bank, whether homemade or store-bought, can make saving money fun by encouraging kids with the progress they can see.
Other Great Resources for Teaching Financial Literacy to Your Children
Family Education’s “Money and Kids” resources page has a collection of dozens of practical articles about teaching children “the value of saving and spending wisely.” The top article, “15 Ways to Teach Kids About Money”, offers great tips, such as helping kids differentiate between needs, wants, and wishes, setting money goals, teaching them how to keep good records of saving and spending, and this gem: “When giving children an allowance, give them the money in denominations that encourage saving.”
“Financial Education for Kids” from CNNMoney includes simple steps to follow, including start teaching your children about money early, encourage their instinctive conservatism, use allowance as an effective teaching tool, and teach teens about adult banking and credit responsibilities.
Warren Buffett’s Secret Millionaires Club uses cartoon video clips to teach business essentials such as save your money, learn from your mistakes, find a mentor, share your knowledge, present yourself well, learn something every day, and pursue your dreams.