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Teaching kids about money: It’s never too early to start

A smiling woman holding a smartphone and a $20 bill gets ready to give online to WVU Extension.

Children absorb information quickly and are naturally curious about the world around them. Teaching children about money early in life can shape their attitudes towards saving, spending and financial responsibility. Research shows that children who receive financial education by the age of seven develop stronger money habits later in life.

Developing financial responsibility requires youth to understand the value of money by learning how to save, budget and invest. When kids understand the value of money, they can manage it wisely and are less likely to make poor financial decisions in adulthood. A lack of financial literacy can lead to many difficulties like overspending and unsustainable debt burdens. As a parent or guardian, you have the power to instill strong habits in your children, starting right now!


Practical tips for teaching kids about money

  • Make money part of everyday conversations

Discussing money should be an everyday conversation in your household. Involving children in conversations about budgeting, saving and spending decisions may be difficult. The discussion can start with explaining household expenses and why prioritizing needs over wants is important. Have conversations about your financial goals— like saving for a vacation or a new appliance— as well as how you budget and make informed decisions. For younger kids, talk about simple things like comparing prices at the grocery store.

  • Allowance and chores: a powerful combination

Providing kids with an allowance can be a great way to teach them money management skills or assign age-appropriate chores that allow them to earn a small income. This instills a work ethic and helps them understand the connection between effort and reward. Instead of simply giving them money, have the conversation about allocating portions for saving, spending and giving. This conversation will help prepare them with budgeting and financial discipline from an early age.

  • Use a clear jar for savings

Digital banking is becoming the norm, but young children need to experience how to spend money. This concept is grasped better when they can physically hand the coins and bills to the cashier. Using a clear savings jar allows them to visualize their progress, making the concept of saving more rewarding.

  • Set savings goals

Help kids understand the importance of goal setting by encouraging them to save for something they want. It may be a new toy, a special outing, or a new outfit. This practice helps develop patience and the ability to delay gratification—a crucial financial skill.

  • Open a bank account

As children get older, opening a savings account in their name is a great way to introduce them to banking. Teach them how interest works and encourage them to deposit money regularly to watch their savings grow.

  • Teach smart spending

Kids should understand that spending wisely is just as important as saving. Help them compare prices, look for deals and distinguish between necessities and luxuries. Teaching them the concept of value ensures they become conscious consumers.

 

Financial education should start early and continue throughout a child’s life. By instilling money management skills at a young age, you are setting your children up for a future of financial independence and security. While we can’t predict every twist and turn life throws their way, one of the most valuable lessons we can teach is the importance of saving money. The habits they form now will shape their financial well-being for years to come. So, start today—because it’s never too early to teach kids about money!


Amber Goff, WVU Extension Agent in Training—Jackson County 

Financial Literacy Education Team