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Key habits and values to teach kids about money

Lessons by age

Family saving money in piggy bank
Rawpixel/Getty Images/iStockphoto

Kids start learning about money a lot earlier than we may think. They see us pay for groceries. They open birthday cards from grandma with a $10 bill inside. They hear us talk about our mortgage. Money lessons are everywhere.

To help our kids feel confident with money, we can tune into these everyday opportunities to teach them how to use money as a tool to support their well-being.

Money lessons for kids ages 3–6

Key lessons: The value of money, developing a relationship with money, delayed gratification, and the importance of sharing and saving

At this age, lessons should be about demystifying money. Help your kids understand where money comes from by focusing on what's tangible. "With children six-years-old and younger, money is very abstract," says Laura Dierke, Director of Member Engagement and financial education programs with Thrivent. "At age four or five, when your kids are getting gift cards for Christmas and checks and cash from grandma, show them what that means digitally, but also show them tangibly with dollars and cents."

According to research by the University of Cambridge, children ages 5 and 6 begin to understand the value of goods and services. Explain the cost of certain toys and activities and begin connecting how work helps to pay for those things.

Introduce them to the retail experience.

"In the last decade, kids rarely see evidence of money passing anymore. Find ways to involve your kids in commerce so they can experience it," says Dierke. When kids are engaged in the shopping experience, money becomes a more tangible concept for them. Review itemized receipts from grocery stores to help them equate prices with their favorite foods or let them hand money to the cashier. "Even with online shopping, let them go through the retail experience with you. Have them put it in the cart and go through the process," adds Dierke.

Teach them about sharing, saving and spending.

By the age of 5 or 6, you can also give your child a small allowance so they can learn how to share, save, and spend responsibly. "At Thrivent, we talk about sharing first because we value sharing and giving back with our money first," says Dierke. "Ask your kids: how much do you want to give back? How much do you want to save and spend?"

Encourage them to dream about the future.

"There isn't a lot a child needs to buy before five years old," says Dierke. "Instead, show them how they're savings is growing and talk about how they can use their savings in the future. That's fun stuff for them. They love knowing that."

Let them experience giving back.

"There are lots of different ways to be generous, and the easiest for me is to write a check or donate online. But my kids are completely unaware of it," says Dierke. Now that it's easier to donate online, giving back has become much simpler, and more private—meaning our acts of generosity may be hidden from our kids. "I strongly believe that giving back needs to be experienced, not just taught," notes Dierke. "I recommend taking the money to the donation center so your kids can see how their money can make a difference."

At Thrivent, we talk about sharing first because we value sharing and giving back with our money first. Ask your kids: how much do you want to give back? How much do you want to save and spend?
Laura Dierke, Director of Member Engagement at Thrivent

Money lessons for kids ages 7-12

Key lessons: Wants vs needs, earned allowance, savings and responsible shopping

Once your kids start earning an allowance, you can teach the cause and effect relationships with money and involve them in household financial decisions, like planning a weekend away, grocery shopping, or creating a holiday shopping budget. "We love to travel in this house. Everyone knows that if we're saving, it's because we're getting ready for a big trip," says Dierke. "My kids also know my husband and I want to retire someday. They know that we save for their college education. And we talk about those things because those are family goals and values."

Explain the difference between wants and needs.

Once kids understand the basics of commerce, you can deepen the conversation to explain wants versus needs. Do you need the fanciest bicycle, or will a simple one work just fine? If your child has their eye on a big "want" purchase, help them think through whether they can budget for it, and if it's worth saving for. And as you consider wants versus needs, you may find that what you value is different than what your kids value. "While I'm never, ever going to think that the Animal Jam game app is a good use of five dollars, it obviously means the world to my seven-year-old and I needed to find a place to be at her level and understand its value to her," says Dierke.

Give your kids more responsibility with money.

Once your kids understand how cash and commerce work, introduce money in digital form and give them more responsibility over their earnings. "In my family, we just started testing a couple of digital solutions," says Dierke. "My kids are using Greenlight right now. And, my family totally recommends it." Greenlight is a debit card for kids that allows them to manage their money, while parents monitor the account.

Talk to your kids about the impacts of advertising.

As adults, we're aware of the powerful influences advertising can have on our purchasing decisions. Many of us learned that lesson the hard way. Kids consume advertising every day, and research has found there was a direct tie between how much TV a child watches and how many items they ask for at the grocery store. Talk to your kids about how advertising influences our understanding of wants and needs. Get curious about the ads that excite them and encourage them to think about why they want certain foods or toys they say on TV.

Learning about finances is a lifelong process.
Laura Dierke, Director of Member Engagement at Thrivent

Money lessons for teens ages 13–17

Key lessons: Financial values, investing and compound interest, job searching

With teenagers, financial conversations can become more nuanced, more circumstantial, and more personal. "My daughter is fourteen, and her favorite question right now is: 'So how much do you make, Mom?' You need to be ready to answer that question," Dierke laughs. Teens are more curious and ask questions you, as a parent, may not have even asked yourself yet. "Learning about finances is a lifelong process," she adds. Teens remind us of that. Engage in regular and open conversations about earning money through work, the concepts of debt and credit, and the importance of sticking to a budget.

Have an honest conversation about credit & debt.

It's a natural part of growing up—teens want more freedom and more money to act on that freedom, which makes them great targets for retail credit cards and other loyalty programs with fine print. Teach your teens about credit, credit scores and borrowing money responsibly. "When I first went to college, I signed up for a J.Crew credit card. I loved the freedom of being able to buy my own clothes, but then found out about 22% interest rates. I think I spent my entire freshman year paying for those three or four things from the J.Crew catalogue," Dierke recalls.

Encourage teens to earn money beyond allowance.

While your 13-year-old may not be able to get a job at the local coffee shop, there are plenty of opportunities to learn the value of working and saving toward their goals. From babysitting and walking dogs to tutoring peers and washing cars, there are several ways to work in the community. You can also introduce your teen to investing through custodial accounts, which allow teens to invest through an account owned by the parent. Custodial accounts allow parents to "gift" up to $15,000 that the teen can then invest. As the parent, you make the trades, but you can make the investment decisions with your teen.

Help your teen create a budget.

Talk to your teens about the importance of creating and sticking to a budget to reach their goals. Start by asking them about their dreams for the future. Do they want more freedom? Maybe they can save for their first car. "My daughter has a Greenlight account that's set to put a portion of her earnings and change from her purchases aside so she can buy a car someday," says Dierke.

gold line

Developing a healthy relationship with money is a lifelong process. And starting early can help kids practice smart money habits and think critically about their goals. Ready to discover how you can support your kids' financial future? Connect with a financial advisor in your area.

Thrivent and its financial professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.

Habit Formation and Learning in Young Children, University of Cambridge