Raising Money Smart Kids

Children learn by our example: good, bad or otherwise. If we’re living beyond our means, our children will likely follow our example; if we handle our finances responsibly, they’ll have a leg up in managing money.

Billie Bidelman Little

I’m sure your two year old already knows what money is. It’s those round metal things you’re not supposed to put in your mouth. But just wait – at twelve your child will be begging for coins for the soda machine and asking to take your credit card to the mall. This gives you 10 short years to make sure your child is financially literate and the time to start is NOW!

Money provides shelter over our heads, food for our bellies and clothes for our backs. We need dollars for school, medical care, insurance, transportation and retirement. Money pays for our “needs” and for our “wants” and even very young children can tell the difference between the two. (They want a cookie, they need a nap!) But here’s the rub. None of us get everything we want. There are choices to be made.

From the time they are toddlers, children can practice money skills by learning to Earn, Save, Spend, Share and Invest. Preschoolers can learn the name of coins and their value and you can teach them about your job and the work other adults do to earn a living. Discuss wants and needs with your children at the grocery store, as you fill the gas tank, and when you pay the bills. Let them make choices early and often. What kind of fruit should we buy? What else do we need to buy if you get a puppy? What puzzle shall we ‘save up’ for?


Giving young children a small allowance that is not tied to chores will minimize arguments and let them practice making money choices. Give them an opportunity to earn extra change by helping around the house. As they mature, they can do odd jobs for family, neighbors, or elderly friends who need a hand.


Start with a piggy bank and then move to bank accounts or mutual funds. Or, let your kids decorate three jars: one for saving, spending and sharing. Each time they earn or receive money as a gift, help them divide the money between the jars, making sure to always save a portion first. Encourage grandparents to start a savings account for your child instead of piling on toys for birthdays and holidays. Introduce the concept of ‘saving up’ for a special treat.


Give children a chance to spend their loose change. For preschoolers, set up a “play store”- a bin or two filled with apples, crayons or items to “buy” with pennies , nickels and dimes. Their number skills will flourish when put into action.


Children need to know that not all families have the same amount of money. Encourage them to give on a regular basis to a food bank, the animal shelter, a non-profit or their church.


Middle school students can learn much about the world of finance from investing in stocks or bonds. They’ll enjoy learning about the “Rule of 72” – a formula used to tell how many years it will take an investment to double. Read more on The Mint – a financial literacy website provided by Northwestern Mutual.

Money can be a hot-button issue, especially in these difficult economic times. But avoiding discussions about money only leaves children clueless when it’s time for them to handle their own finances. As a parent, our responsibility is to teach children to be knowledgeable in their use of money as they grow into maturity. Like every other topic, finances need to be discussed with your child from the time they are very young. Talking with your children about earning, spending and saving and setting an example of sound money practices, will go far in helping them establish good financial habits of their own.

Watch for a new Discovery Center program this fall called the “STEAM Tour.” It will feature science, technology, engineering, art and math, with the math area focusing on money matters. It will be a great place to engage children in a hands-on activities about money. But If you’re eager to begin raising a financially literate child today, www.moneyasyougrow.org has a variety of age-appropriate activities for toddlers through teens.

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