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How many of us can reflect on our childhood and say we wish we learned more about money? Maybe you even graduated college and still had no clue how to manage your money and pay off your debts. Most people gain money skills and knowledge from their parents and caregivers as they grow and develop. Your children will learn their financial habits from watching you spend, save, borrow, and earn. The good news is you don’t have to be a money expert to help them achieve positive and strong financial habits.

According to the Consumer Financial Protection Bureau, there are three major building blocks of financial development where skills and behaviors come into focus:

Early childhood:

Developing executive function skills

Middle childhood:

Building financial habits and values

Teen years and young adulthood:

Practicing money skills and decision-making

Here are a few activities and conversations to try with your child to support each building block as they develop.

Developing executive function skills (ages three to five)

During this time, children are too young to understand overly complex financial concepts. But Beth Kobliner, author of the New York Times Best Seller Get a Financial Life, claims children as young as three can grasp financial concepts like saving and spending. At this stage, it is best to practice basic skills and attitudes that will serve them well in the future.

Planning and problem-solving: 

Set up easy money dilemmas like, “If you have $2.00 and want to buy an apple for $0.79, how should you pay?” This is also a good time to introduce the idea of waiting to buy something.

Sort money:

Teach your children the difference in money bills and what they represent (their worth).  

Play with money:

Instead of just talking about money, pick up a toy money drawer with bills and coins. This can be used around the house to “buy and sell” items of importance to your child to help them understand the concept of purchasing goods.

Building financial habits and values (ages six to 12)

In the middle childhood stage, your children will begin to pay close attention to the financial world around them. Although their peers are beginning to influence them, you, the parent, are still their biggest influencer. Use this time wisely. 

Discuss how local businesses are funded:

Teach your child about supply and demand and how a business can only be successful if its products or services are needed. Otherwise, it will not survive.

Go over your receipts:

Discussing sales and discounted purchases can help your child understand different saving methods and why they should wait to buy desired items. This can also be a good time to discuss how buying in bulk can save money.

Educate your child on the worth of their favorite things:

Children tend to think their favorite toys appear out of thin air, or they can have a new one whenever they want. Teaching your child how much something costs and how long you have to work to get it will teach them the value of the things they cherish.   

Practicing money skills and decision-making (ages 13 to 21)

Teens and young adults are now beginning to make their own financial decisions. Though their spending will be relatively small, their habits will affect their financial future. Now is the time to open a bank account for your child to teach them about money management.  

Show your children how they can find useful financial information: 

Numerous online resources like Khan Academy and BizKids teach your children financial literacy, offer educational lessons, and provide discussion forums where they can talk with their peers about finances. Ensuring they always have a wealth of information will allow them to make well-informed financial decisions.

Compare and research different careers:

Children should understand what is required to earn specific jobs or salaries.  This way they will learn the importance of doing well in high school and college. 

Go over their pay stub information:

At this time your child may be working and receiving a paycheck. You should take the opportunity to go over their pay stubs and teach them about things like social security and taxes. The more they understand where their money is going, the better.

Discuss saving for college: 

Although you may intend to pay for all or most of your child’s undergraduate career, it is beneficial for them to understand how you will be paying and how you prepared for the payments. Showing them how long it took you to save, how long it will take you to pay off any debt, and how it will affect your financial life will influence how they save in the future.

Talk about credit cards:

As soon as your child turns 18, they will start receiving endless offers for credit cards, all of which will appeal to their inner spender. Teach your child about spending money they don’t have, interest rates, and what it’s like to live with credit card debt.

Educating your children about financial wellness and success will take an investment of your time and energy. But, if you don’t want your children to look back and wish they had known more about money like you maybe did, the time and effort will be worth it. Helping your children to develop good financial practices and showing them how to manage their money now will ensure that they are less likely to have money problems and regrets in the future. Isn’t that a future you can look forward to?