Children start learning about money from early childhood. According to PBS, by the age of 7, most kids understand the value of money, the basic concept of delayed gratification and that certain decisions may cause them problems in the future.
In fact, research from GoHenry shows that missing out on early financial education can be detrimental later in life. Over half (51%) of those who received financial education as a child have up to $5,700 cash savings in a savings account compared to under a third (30%) of those who didn't. 40% of those who didn’t receive financial education said they have no savings at all and can’t afford to save.
A GoHenry account can accelerate a young person's financial education in several ways. Firstly, a GoHenry prepaid debit card can help them to establish a connection between work and money by letting them decide what to spend their money on and what to save. This teaches them to be more reflective in how they think about money. In addition, GoHenry customers have access to in-app Money Missions, where kids can watch videos, take quizzes, and earn points and badges while gaining money skills for life.
Why is it important to teach kids about money?
Money plays a huge role in our lives and can affect our relationships and general wellbeing. Teaching kids about money equips them with the confidence, knowledge, and skills to manage their money effectively now and in the future. Developing good money habits is a critical skill that children need to thrive in today's world. It’s vital for their wellbeing as it helps to make their future more secure. According to GoHenry's latest Youth Economy Report, three-quarters of young people already recognize the importance of sound financial skills, saying they believe good money management skills will help them in their careers. Therefore, the sooner you start teaching kids about money, the sooner they can hone their money management skills.
What should I teach my kids about money?
There are many age-appropriate and fun ways to teach kids about money to help them develop the knowledge and skills to manage their own money as they get older. If you set up a GoHenry account for your kids, they can also use Money Missions to boost their financial education. Through fun videos and quizzes, they can learn more about budgeting, responsible spending, saving and investing. Here are some more ideas for teaching kids about money by age group.
5 to 7-year-olds
From the age of 5 to 7, your children will have likely started to develop a deeper understanding of numbers and begin learning about money at school. It's a great age to begin developing their understanding of money management.
1. Open a GoHenry account
You can open a GoHenry account for your child from the age of 6 to give them somewhere to put their money. You can then set up regular allowance payments to their GoHenry prepaid debit card, so they have their own money that they can spend or save. This provides parents with a great opportunity to discuss where children think money comes from and how it's earned. You might want to set up tasks on the GoHenry app for them to complete and introduce them to the experience of earning money. Be sure to also set them up with a savings goal, so they will automatically save some of their allowance each week.
2. Collecting coins
We might be living in an increasingly cashless society, but children still need to get the experience of handling cash. Give your child a piggy bank or even just a clean jar, and they can start collecting coins to put in it. It's a great way to ensure they can recognize and count coins, while also introducing them to saving. Encourage them to fill the jar to the very top with coins, and they'll enjoy watching their savings grow before their eyes. Once they've filled the jar, transfer the money to the GoHenry prepaid debit card, where they can add it to their savings goal.
3. Giving back
Children often enjoy helping other people, so they will probably like the idea of donating to charity. As well as being a nice thing to do, this also shows them the value of money and how it can help people less fortunate. With GoHenry, children can make a one-off or regular donation to the Boys & Girls Clubs of America, using the new Giving function in the app. Alternatively, you could give your child some coins that they can put in a donation bucket and briefly explain how the charity they're donating to will help people. They could also donate old clothes and toys to a local charity or choose a couple of extra small things at the supermarket to put in a food bank collection.
4. Paying for shopping
Kids need to know how to pay for things with money, whether swiping a card or counting out cash. Help them practice money skills and learn how paying for something works by showing them how to make a transaction. Walk your children through the process of paying for an item and have them physically use cash in the store to understand the value of a purchase.
7 to 11-year-olds
Between ages of 7 to 11, most children will become consumers for the first time and begin to understand the difference between their wants and needs. So it’s the ideal time to encourage them to start thinking about achieving some of their ‘wants’ through saving and earning.
5. Purchasing power
Giving your children their own money to spend is the best way to start their financial education. Today, most purchases are made by card, so it makes sense for children to begin learning how card payments work. Pay an allowance into their GoHenry account and encourage them to use their GoHenry prepaid debit card to make their purchases. They can then check their GoHenry app to track their spending and see how much money is left.
6. Learning the differences between want and need
Talk with your children about what it means to want something like a new pair of sneakers or an ice cream compared to needing food and somewhere to live. You can use this as the foundation of talking about budgeting and helping them understand spending choices: if we choose to buy something, we may have to do without something else. You can also link this with the relationship between working and earning.
7. Incentivize saving
Delayed gratification is something that many children struggle with. Helping them understand saving can show them the many benefits of not getting what they want straight away. Whether they want a new pair of sneakers, book or scooter, encourage them to set themselves a savings goal and work out how long it will take them to afford the item they want. They can use their GoHenry app to watch their savings grow.
8. Give them commissions for chores done (not allowance)
Another approach for parents who would rather not use an allowance system is commissions. Instead of giving your child a set allowance, pay them commissions for chores and housework based on the value of doing a particular job. When figuring out how to teach kids about money, this approach can help kids better understand how they earn money, and better prepare them for a job or career someday.
9. Don’t let them make impulse purchases
Impulse purchases are a struggle for most adults, so help your child learn how to say no to impulse buys from an early age. If your child asks for something in the grocery store or wants to buy a new shirt because they saw it in a store, use it as an opportunity to talk to them about making impulse decisions.
11 to 14-year-olds
From age 11 to 14, children usually start to want more independence, and you can support them by encouraging them to take responsibility for their spending and saving choices.
Older children and teenagers can start learning how to live within their means. Help them set a budget for how they might spend their allowance while discussing what you expect their allowance to cover. Make sure they understand that if they overspend on something, they won’t have the money to purchase something else, and you won't be bailing them out.
11. Ads and scams
Every day, your kids are bombarded with ads, and with the popularity of influencers, they're more than likely being targeted on social media, whether they realize it or not. It's a good idea to talk to your children about paid promotions and how they work to help them make better-informed decisions about what they spend their money on. You can also use it as an opportunity to chat to them about the risk of scammers, and if something appears to be too good to be true, it probably is.
12. Encourage them to earn
Children can't get a part-time job in the US until they're 14, but they can still earn money with your help. You can set up regular allowance payments in your GoHenry app and housework tasks for them to complete. Paying kids to do tasks helps emphasize the link between work and earning. Once they earn money, they can make their own financial choices in terms of budgeting, spending or saving.
13. Encourage them to become entrepreneurs
In today’s world, kids have more opportunities to start making their own money. Encourage your child’s entrepreneurial spirit by helping them sell stuff online, start their own blog, build a dog walking business, or run a classic lemonade stand. Practicing business skills and teaching kids about money now will benefit them for years to come.
14. Play money board games with them
Money board games are a fun, engaging way to get kids involved in financial education. Teaching kids about money can feel daunting for parents, but money games can make it easy to start the conversation. Get the whole family involved with a money board game night to easily teach money for kids.
13 to 16-years old
When a child hits 13 and becomes a teenager, they tend to have bigger and more expensive aspirations and money starts to matter to them more.
15. Become a critical consumer
Teenagers are of the age to start giving more thought to what they buy. Help them become a critical consumer by explaining how they can spot a good deal. Encourage them to shop around rather than buy the first thing they see, compare rates and read the small print.
16. Crank up the savings
It is only a few years until your teenager will go to college, want to buy their first car or move out to a place of their own. Alternatively, they may have more immediate goals in mind, such as festival tickets or some new clothes. Whatever they have their eye on, now is the ideal time to get them started with saving for their future. In their GoHenry app, they can set a savings goal and set aside a portion of their earnings, whether from an allowance or a part-time job.
17. Discuss debt
In 2019, the average amount of debt per US adult was $90,460. That’s why it’s important to help your teenager understand what it means to borrow money and the consequences of not repaying it. Talk with them about the different types of credit and if you lend them any money, ensure they pay it back, so they learn the difference between a gift and a loan.
18. Encourage them to save for college
If your child plans on attending college, help them avoid debt later by encouraging them to save now. A savings plan for college can help them build good money habits and pay for a future degree. Talk to your teen and encourage them to save a part of any summer job earnings or allowance toward college in a savings account.
19. Discourage reliance on student loans
Along with saving for college, help your child understand how student loans work and that money ultimately needs to be paid back. Loans for college can be overwhelming, so talk through different money topics as they learn. Discuss scholarships, tuition costs, and working a part-time job. Prepare your teen early by helping them understand their financial options.
20. Warn them about the risks of credit cards
When your child goes to college or turns 18, they’ll likely be given credit card offers. Warn them about the risks of credit cards and teach them how credit cards work. Help teens understand how interest fees are charged and how payments impact their credit. Remind your child that credit cards aren’t free money.
How to teach kids about money
There are many ways to teach kids about money and start meaningful conversations about money, budgeting, and saving.
21. Use a financial education app such as GoHenry
Set your kids up with a GoHenry account, and they'll have access to a huge library of financial education resources. GoHenry's in-app Money Missions cover money basics, including spending, saving, investing, borrowing, giving, and compound interest. Kids can take quizzes, watch videos and even earn badges and points as they develop their money skills.
22. Set a good example with your money habits
Children can start forming money habits from as young as 7, and these habits are likely going to be influenced by the way they see their parents approach money. Set a good example for your children, and they'll be more likely to follow it as they get older.
23. Teach kids the value of money by encouraging them to earn it
To encourage your children to understand the value of money and become savers, encourage them to earn their own money and learn how to use it. Hold a contest between siblings to see who can earn the most money to teach the value of money engagingly.
24. Let them take control of their spending
Give your children a chance to learn how to take financial responsibility by giving them an allowance or paying them to do household tasks.
25. Set a budget with your child
Encourage your kids to start practicing budgeting, whether to help you budget for a day out and all the costs involved or to budget their own money to cover the things they want.
26. Let children get familiar with money from a young age
Get your kids handling money from an early age to help them build confidence and familiarity with it. Let them handle coins, cash and even your debit card and even set them up with a piggy bank or money box to keep their cash in.
27. Teach them the difference between needs vs wants
Help your kids understand the true value of money by teaching them the difference between needs and wants. Explain that needs are life's necessities such as healthcare, food, shelter and clothing. Wants are everything else, the things we could essentially live without, such as the latest sneakers, a new smartphone or a takeout pizza.
28. Talk to your kids regularly about money, especially as they become teens
Kids and teens learn about money in stages, and you can build on previous lessons with deeper talks and ideas. Talk to your kids regularly about money and show them how to make smart choices, especially as they become teens. Prepare kids early for their financial future by teaching them about money and how to spend wisely.