Teaching children about money is crucial to their future financial success. By learning about money at an early age, kids develop good habits that last a lifetime.
Bright Futures Indiana says children’s brains develop the fastest from birth to age five. And, by the time children enter kindergarten, 90% of their brains have developed. This means that the sooner you start, the better.
Let’s learn about the best time and ways to introduce your children to early financial lessons.
Why is it important to teach children about money?
Understanding money helps children make smart decisions. It prepares them for adulthood when they will manage their finances.
Among other benefits, teaching financial literacy early can lead to:
- Reduce long-term stress.
- Avoid debt.
- Promote independence and responsibility.
Money skills are just as important as reading and math. When children learn to budget, save, and spend wisely, they are more likely to become financially responsible adults.
Studies show that financial habits are formed at an early age. According to a study from the University of Cambridge, most money habits are formed by the age of seven. Starting at an early age ensures that these habits stick.
What is the best age to teach children about money?
Children can begin learning about money as soon as they begin to understand basic concepts. We recommend starting as soon as children understand simple ideas, such as counting coins. At this point, you can teach the value of various bills. For example, a child can usually learn to easily identify a penny, nickel, dime, and quarter.
As children get older, their understanding of money can grow. Consider starting with simple concepts early on, then work on more complex ideas. For example, after counting and bill recognition, you can teach your child about saving and spending. After this, you can introduce more complex ideas, such as earning through chores or odd jobs, and budgeting.
What grade do kids learn about money in school?
Financial literacy is increasingly being implemented in elementary schools in Indiana. Many schools aim to include money lessons in the early grades, often within basic math. Some teachers use toy money or bills for counting as early as preschool.
By middle school, students typically learn more broad financial concepts. Schools may provide special programs or workshops on financial literacy. These may include lessons on budgeting, saving, and even the basics of credit.
Indiana high schools are now required to incorporate personal finance education into their curriculum. This is so that students have a basic understanding of money management before they become adults. Starting with the group of 2028, all high school students will be required to complete a course on personal financial responsibility to graduate.
If you need confirmation regarding financial literacy programs in local schools, contact your local school district or the Indiana Department of Education.
How to teach your kids about money
Teaching children about money can begin at an early age, even with simple math skills like counting. The sooner you start with basic concepts, the sooner you’ll be able to introduce important financial literacy skills. Here are some fun and effective activities that will help young children learn about money at different ages.
1. Count coins and notes (ages 2–5)
Start teaching young children to recognise and count coins and notes. Use real or toy money to practice. Make it fun with games like sorting and counting notes of different denominations. For example, you can play a shopping game. Let your child match coins with pictures of the same coin or count change in a pretend shop.
2. Use Clear Jars for Saving (Ages 3+)
A neat savings jar allows children to see their money grow.This visual aid reinforces the idea of savings. Encourage your children to set small goals, such as saving for a toy, so that the process is rewarding. For example, if your child wants a $10 toy, help them count their money each week and track their progress toward the goal.
3. Read money books (children above 3 years of age)
Reading money books helps children understand financial concepts in a fun way. For example, you can read “The Berenstain Bears’ Trouble with Money” with your child. This book teaches lessons about earning, saving, and spending in the form of a story. After reading, discuss the story and see how the characters handled their money.
4. Start giving an allowance (ages 4 and up)
Giving an allowance helps children learn about earning and saving. Start with a small amount, such as $1 per week for a 4-year-old. Increase the amount as they grow and take on more responsibilities. For example, a 5-year-old can earn $1–2 for simple tasks like setting the table. Meanwhile, a 10-year-old can earn $5 for mowing the lawn.
Originally published at My Medium Account: https://medium.com/@Unfiltered24 on February 26, 2025.