Key lessons to teach your child about finances at every age

Parents and legal guardians have primary influence their money habits later in life. Even if you don’t think children see how you spend or save money, being a good example early on can help them form better habits later. There are many ways to teach your child about finances, including by setting yourself as a good example. Talking to them early about your financial choices, such as at the grocery store or shopping for new clothes, can help them learn some lessons early.

Being open about money topics such as saving and spending and teaching them about cash flow, their needs vs. wants, the importance of saving, etc. early can help guide them into financially savvy adults. While you can start teaching your child about finances at every age, their age can dictate the best lessons to learn. Here are some ideas of what to teach children starting from very young into late teen years.

Ages 0-5 years

For younger children, lessons concerning money should be simple. This is a good time to start introducing the idea that most things cost money and that money must come from somewhere—such as a job. Discuss your job with your child and have them learn about other people's jobs to give them examples of how adults can earn money.

Teaching children the difference between needs and wants is another lesson to teach younger children, such as the difference between needing groceries for dinner versus wanting ice cream for dessert. If you child is asking for a new toy, you can teach them about saving up for something by setting up a plan to slowly put money away to get the item.

Even at this young age, you can set up a savings account for your child to put money from gifts they may receive. At Alliant, you can open a Kids' Savings Account for your child under the age of 12 where you are a joint owner, and they can begin to earn interest early.

Ages 6-12

Once kids hit school age, they can learn many more lessons about money and making smart financial decisions. At this age, you could have them involved in some financial choices, such as comparing options at a grocery store or looking at the prices of different meal choices at a restaurant. You can talk to them about the options and look at the prices, discussing the concept of value. 

If your child has an allowance, this is also a good time to start showing them how to save. If they already have a savings account, make it a regular thing to go to the bank and put in money, or show them how they can do it digitally. This way, they can see where their money is and watch it grow over time.

Ages 13-17

As your child grows up, making each lesson more age-specific is necessary. At this age, kids not only want to do more, but they also might start to earn money by doing chores or a part-time job. If this is the case, talk to your child about putting a specific amount away in monthly savings. You can also talk to them about setting short- and long-term saving goals, such as college or a car, to help motivate them to save even more.

This age is also a good time to start talking to your child about credit and debit cards. While providing a child under 18 with a credit card isn't necessarily a good idea, helping them understand the purpose early could leave them to make better credit card choices later. Talk to them about how credit cards are essentially loans you must pay off monthly, or they will gain interest.

Instead of a credit card, you can set your child up with a debit card, where the money they spend will come directly out of a checking account as if they were paying with cash. At Alliant, you can set your child up with a Teen Checking Account once they turn 13, which comes with a debit card, and where you, as the adult, can set daily spending limits and help keep watch over their accounts as they learn to be more financially independent.

Ages 18+

Even though this is a time when your child is legally an adult and could be on their own, the lessons shouldn't end. 18 is a good age for your child to get their first credit card and begin building good credit. A good way to introduce using a credit card is to suggest using it for necessary items, such as gas. This way, they aren't using the credit card as their only payment method but will use it enough that there is something that they will need to pay off every month.

This is also the age to start talking to your kids about emergency funds, where they have a certain amount set aside in case of an emergency. Even if they may not need it right now, starting to save for an emergency fund now can be helpful when they move out and are on their own.

Teaching your child about finances at every age

Starting your child young by learning how to spend and save money responsibly can set them up for success in adulthood. Check out these links for more tips on raising financially savvy children:

• Webinar: Kids and Money: Skill for Surviving and Thriving
• The benefits of banking together with you family
• How involved to be with your teen’s finances