Teaching Children about Money | Money Management | Exodus Lending

By Kaitlyn Szabo • January 8, 2021

Time and again at Exodus Lending, our participants share with us that some of their financial goals are to improve their money habits and be a role model for the children. Thankfully, there are many ways we can impart the importance of money to children, no matter their age!

Here are some tips from Better by Today at NBC that may work with young children or teenagers.

Teach the basic principles of money. Build a solid foundation by discussing where your family’s money comes from (e.g., hourly wages, investments, benefits, financial aid) and where your family’s money goes (i.e., savings, groceries, clothing, rent, charitable donations).
Include children in family money talks. Some families find it inappropriate to talk about money, but discussions concerning savings goals, the reasoning behind budgeting, and reminders to pay bills are a simple but effective way for children to learn about personal finance.

Many strategies work well for varying age groups, from toddlers to kids to teens. Here are some, broken down by age group!

Kids Ages 3-8

Practice goal-setting. For example, have the child pick a toy they’d like to buy. Talk about how much the toy costs and set a savings goal. Together, add money to their savings, track how close they are to their target amount, and talk about when they will reach it.
Provide an opportunity to make a small financial decision. While shopping, allow the child to choose between two or three items to purchase. If possible, let them pay the sales associate for the selected item at the store.
Teach the value of generosity. If feasible, guide a child to share money with a friend or sibling, contribute to a faith group or charity, or send a small amount to a meaningful cause or organization.

Kids ages 9-12

Introduce the concept of opportunity costs. Remind them to weigh the value of items by framing purchases like,“If you buy this video game, then you won’t have the money to buy that pair of shoes.”
Explain the difference between needs and wants. As children become increasingly independent at this age, they’re likely going to say more and more, “I want this.” It’s crucial to distinguish between emotional purchases (wants) and necessary ones (needs).

Teens ages 13-18

Discuss more complicated concepts. Introduce slightly more advanced principles, such as savings accounts, compound interest, and budgeting. For example, share Exodus Lending’s Credit Score Game to encourage them to learn about credit.
Encourage more active participation in money conversations. By asking teens to contribute meaningfully during household discussions, they can learn about individual and family financial responsibilities.
If relevant to their career or life goals, begin thinking about college. Use this College Scorecard to compare costs, employment prospects, and the impact of student loan debt on their lifestyle in adulthood.

Money Management E-Newsletter: December 2020