Important Money Lessons To Teach Kids By Age

Young boy being showered in dollar bills.

Learning about money is so important for kids to understand the world around them, and remember, this might not be something that they're taught in school! So, that leaves the responsibility with you to teach your kids everything they need to know about money management. Because of this, some parents will be wondering when the right time is to start - and the answer should be straight away! From setting up a piggy bank for younger children, to talking to teaching teenagers about getting a credit card, we'll try to cover all the important money lessons for all ages!

Principles for under 5s

The first step which most parents will have already done - is to set up their kids with a piggy bank. Not only is this a great way to transition into having a real bank account when they become teenagers, but it will also help them to learn important lessons in the meantime. It's helpful for parents to treat this as a proper bank account (although their outgoings are likely to consist of sweets and toys as opposed to bills). For instance, teach them how money is brought in - by working (this can be as abstract as you want) and then teach them that money will also need to go out to buy things that they want. So, instead of telling them that the toy they want costs £3, help them grab a few coins out of their jar and physically hand the money to the cashier. This simple action will have much more impact than just explaining it at home.

So for under 5s, it is important to set a basic understanding of the process of earning and spending, for them to grow up with a healthy relationship with their finances in the future!

Lessons for 5-7-year-olds

According to the University of Cambridge, this age is actually a very important age in terms of learning about money. Whilst this blog is about important lessons for you to teach your kids, this study actually found that money habits in children are formed by the time they’re 7 years old just by watching you.

So, the main point here is to set a good example! If you, as parents, are always arguing about money, they’ll notice - and this will be what forms the basis of their understanding of finances. They may grow up thinking that money is evil! Whilst stressing about money struggles is completely understandable, parents must try not to keep children in the dark at this age - as they will be picking up on this as well. It's healthy to maintain an open and constructive dialogue about money within your family - no matter how awkward it feels at first. So, by setting a good example now - they’ll be much more likely to follow it when they get older!


Lessons for 8-11-year-olds

At this age, your children will be slightly more independent - and this should be reflected in their responsibility to deal with money too. For instance, if your 11-year-old is going to a theme park with their friend's parents - encourage them to take their purse/wallet in case they want to buy anything from the gift shop! By allowing them responsibility for their money, they will make important realisations in how to manage it properly.

This will also help them to understand the idea of 'opportunity costs' - that’s just another way of saying, “if you buy this game, then you won’t have the money to buy that pair of shoes.” At this age, your children should be able to weigh up the decisions they make and choose an option. It will also help them to grasp an understanding of the concept of 'impulse buys'. If they buy the game in the gift shop - and then regret it later because they now can't afford something that they've wanted for ages, they'll understand that impulse buys are the riskiest of purchases!

Lessons for 13-16 years olds

This is also considered a really important age, since some teens may already make money for themselves with a part-time job! So, one lesson to ensure that your child knows at this age, is that the amount of money in your bank doesn't make a difference to the person that they are! Social media is likely to be present in their lives by now and this can be a dangerous place for picking up bad habits surrounding money.

One way to ensure that they're not hung up about making lots of money to buy things whilst they're still in education, is to teach them to be charitable! Once they start making a little money, be sure to encourage them to donate to a charity or even someone they know who needs a little help! It doesn't have to be a huge amount - it just reflects a healthy attitude towards their own financial situations. The goal here is for teenagers to find out that giving doesn’t just affect the people they give to, but the giver as well. If your child donates even a small amount (a few pounds) of their wages every month, you should be really proud of them - because this is a great milestone to have passed.

Parent teaching teenager about money

Setting up your 16+ teenager with financial skills for life

At this stage, your teenager will look to start becoming financially independent. Whether you choose to fund them through college or university, there are still important lessons to teach them during this time. Whilst education will be the most important factor in their lives - they must still be building strong financial principles alongside it! So, firstly make sure that they're set up with a simple bank account. If you've been doing some of the above along the way, your teen will be more than ready for this to happen. This takes money management to the next level, and will (hopefully) prepare them for managing a much heftier account when they get older.

Another idea for college-age kids is to get them to consider saving for university (or other). Whilst money shouldn't be their top priority - it's also a good time to teach them that living rent-free is a very easy and logical way to start saving for the future! Do they plan on working over the summer? Perfect! Encourage them to allocate a portion of that to a savings account. Not only is 'saving for a rainy day' a necessity for most - it will also help them to feel in control of their lives and to really understand the effects of the life decisions that they are about to make.

At 18, your teenager may be wondering about whether to get a credit card. They will have no doubt received adverts about it and the thing to remember here is - that it is completely their choice. If your child has shown financial responsibility up until now, using credit could be a good idea, after all, having a good credit score is very important in today's world. Although some parents may have heard horror stories about teens using credit, it is important to allow them to make their own decisions (and they will sometimes make mistakes). To learn about how to budget this type of spending - you could encourage them to download an app to help them! They're likely to be glued to their phones a lot at this age anyway!

Finally - the most important lesson that you can teach your 16+ child is to send them off into financial freedom understanding their options in the world. If they have developed all of the above tools over the years from their family, then the chances are that they will continue to have a very healthy relationship with money. However, they will need to know what to do when it comes to making financial choices! Whether your child wants to become a dentist, a waiter or an athlete - make sure that they are doing it for the right reasons. In other words, if they do want to become a dentist - make sure that it's because they really love teeth (and not because it comes with a hefty salary). Understanding that they should chase their passions rather than paycheques will ensure that they go on to live a happy life - and that is the most important thing! And also, remember that with any career path, teens will also need to understand tax, mortgages, bills and all of the other fun stuff that being an adult brings!


Written By

Annabelle Beaumont

Originally from Bournemouth, Annabelle spent her childhood travelling and exploring. She moved to Bahrain at the age of 13 and then to London at 19 where she attended Chelsea College of Arts, UAL. She loves all things creative - especially if they involve recycling materials, as this is what she is most passionate about. Aside from art, Annabelle also enjoys walking her dogs and cooking for friends and family.

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