When is the Right Time to Introduce Financial Education for Your Children

Financial education is a critical life skill where parents play an essential role. Although kids learn about money in school, experiences at home and with the family also teach them about making financial decisions. Parents have a strong influence since kids learn from watching and listening to how mom and dad manage finances. Knowing when and how to introduce financial literacy to your children gives them a better foundation for successfully managing their money in the future. 

Parents can start teaching kids about money as soon as they are able to count. Educators offer tips for teaching basic financial concepts to children starting from ages three to five years old. Preschool kids can learn to identify monetary symbols and the names of different coins. At this stage of development, kids are learning about ownership when they are taught to share toys that belong to them. They also have the capacity to understand the concept of trading items. It is advisable for parents to talk to kids about the difference between wants and needs at this age.

Since preschool kids are usually very observant of their parents, they see when mom or day pay the cashier at stores and restaurants. By watching their parents pay for things, children develop an interest in money and the concept of trading it for goods. Shopping trips with children are an opportune time to introduce early financial knowledge. Show them how the items on the shelves have different prices based on their value. While at the bank or ATM, explain that you are taking out money earned by working. Games with pretend money are also helpful for introducing young children to financial concepts. 

In kindergarten, kids are introduced to financial vocabulary and concepts. They learn about spending, saving, and sharing money. By the time they reach second grade, counting money and combining coins and bills to pay for items is a learning benchmark in math. At this age, imaginative play is helpful for reinforcing financial education in the classroom at home. A fun way to teach young children about money is to set up a pretend restaurant or store. Parents can make price tags or menus with children and use food and pretend money for the activity.

Parents can also teach young children about saving money by giving them a piggy bank. A clear glass jar works well since kids are excited to watch their savings grow over time. Each time they add money to their bank, kids can practice counting their money. Parents should help kids set goals for spending and teach them that saving money is a way to buy costly items. Encourage them to save the money they receive from an allowance or birthday gifts until they have enough to purchase something special. This helps to instill an early mental representation of the importance of managing finances. Kids feel a sense of accomplishment when they save their own money to pay for something. 

As children develop an understanding of the value of money, they also gain a sense of financial responsibility. By fourth grade, kids learn about paying taxes and calculating percentages. Therefore, it is a good time for parents to explain how to read a sales receipt and determine the amount of sales tax. Fourth graders also have the foundational math skills required to understand the basics of creating a budget. Parents can take them to a bank to open a savings account for depositing their allowance or money gifted to them. Children who have their own savings account tend to develop a greater appreciation for saving money and earning interest as they grow older. 

Another resource for introducing financial literacy to kids is the United States Mint website. It includes a variety of engaging information for teaching kids about money. The website also features games, videos, coloring pages, and other fun activities for kids. Introducing the facets of financial education in fun ways helps children build positive financial habits that can last for a lifetime.