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Teaching Kids about Money: Your Age-by-Age Guide

Decisions about money happen every day. Your kids are watching these life decisions and most likely have asked you questions. That's why it's important to teach kids about money throughout each stage of life.

Ages 2-5

This age may not be ready for complex money lessons, but they are ready to listen, have a vast imagination and are eager to please. Young kids love to play store, have an imaginary meal or even a tea party. Each of these settings provide the opportunity to introduce money concepts, including learning how to count and recognize coins. The classic piggy bank is also an ideal tool and ongoing activity to teach kids about money. Be sure to use a clear container/bank so they can see their hard work and growth.

Ages 6-10

This stage of financial literacy for kids is a great time to introduce that money is earned. If a child wants a toy or game, then they must do chores around the house to earn the money to buy it. They'll learn not to make impulse decisions, and this leads to comparison shopping, because now they are dealing with their money, not someone else's. It's also the perfect time to open a savings account and deposit some of their birthday and holiday money and money earned. Remember that piggy bank? It now provides a source of money for donating to a religious organization or a local charity or growing a savings account.

Ages 11-14

This age group is starting to experience a sense of freedom and independence. They have been learning and building habits and standards along the way. By now, you have taught them the principles of earning, spending, saving and giving money. They should be able to make decisions, comparison shop and understand the results. This may look like tagging along to a yard sale or grocery shopping with their parents. At this age, children should be actively looking for ways to earn money through yardwork, babysitting and projects for family or neighbors. An allowance could also teach them how to budget. They'll (hopefully) learn the value of hard work and make mistakes under your roof – rather than when they're on their own.

Ages 15-18

Teenagers usually have a job or are thinking about one. They relish the extra money, and it helps put in place everything you've taught them along the way. They are beginning to see the rewards of working, are familiar with a budget and have long-term savings goals. You may also have conversations with them about the differences between saving and investing, as well as the potential benefits of investing for future goals versus spending the money today. This is the time to open a regular bank account connected to an ATM card or debit card. They'll quickly learn all the tricks on how to deposit cash via the ATM or their smartphone and, of course, how to withdraw it. It also would be a good time to talk about the proper use of credit cards, as they'll soon be able to apply for one on their own. As your kids earn money through their jobs, they may inquire about the taxes being withheld from their paychecks. This will lead the way to a good conversation about taxes, Social Security and Medicare.

Remember, starting early is the key! Preparing your children for financial success will provide them the tools and best practices needed to manage their money in the future.

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