An education is important, but something that a lot of classrooms tend to overlook is financial literacy. How to make a budget, save money, and pay bills are vital skills that everyone needs to know and makes “adulting” so much easier than being thrown into the deep end when you first move out on your own. Therefore, no matter your children’s age, there is no better time than the present to introduce your kids to the school of life’s financial curriculum.

Ages 3 – 5: Understanding Currency

Learning money management can begin as soon as your child learns how to count. Basic math skills set the foundation, so start by counting change added to a piggy bank and then move on to teach them the value of currency. If your child receives an allowance, try providing it in different denominations so they can learn how change and bills add up. How many nickels are in a quarter? How many quarters are in a dollar? And so on….

Ages 6 – 8: Learning How to Save

As children get older, birthday money and allowances can be divided into two categories: money to spend now goes into their purse or wallet and money to save for later goes into their piggy bank. Having something special in mind to save for is a great incentive to add to the piggy.

When planning a shopping trip, make it into a game and involve your child in the process. Give them your grocery list and a stack of flyers and have them search for coupons for those items, calculating how much they can save. If you’re feeling generous, reward them with the difference in grocery savings to go towards their piggy bank.

Finally, emptying the old piggy bank into a savings account will introduce your child to the concept of banking. Get into the habit of a monthly visit to the bank to make a deposit. When money is finally withdrawn from their savings account to buy a special item, show them how their bank balance changes, so they understand the concepts of addition and subtraction when it comes to their savings.

Ages 9 – 12: Creating Good Spending Habits

Between the ages of 9 and 12, your child might start earning extra money from chores, as well as have the desire to go shopping for themselves or take part in more frequent activities with their friends. Now is an ideal time to upgrade the piggy bank to a chequing account to help them learn how to manage their money on a money regular basis and use a debit card.

Discovering the difference between nice-to-haves versus need-to-haves is an important lesson to learn at this point. Try to involve your child in the process of buying new things for the household such as electronics or appliances to demonstrate what is needed vs. what is not. Help them to understand the benefits of warrantees and insurance.

When working within a budget, is it better to pay for all the bells and whistles or have a little extra protection in case something goes awry?

While the realities of monthly bills are still on the distant horizon, this is a great time to encourage your kids to begin splitting up their allowance into three categories: some for spending, some for saving, and some for sharing – a placeholder for future household expenses. Sharing money might include donating to a charity, buying a treat for a sibling, or some other act that encourages them to put a portion of their money towards something or someone else.

Ages 13 – 15: Planning for Bigger Expenses

Come their early teens, your child may have a part-time or summer job and begin eyeing up bigger ticket items. Factoring in how many hours of work it takes to buy a pair of designer shoes or a new video game console is a great strategy to add real-world context to how spending and saving works.

The lure of larger expenses may also inspire some kids to consider getting a credit card in a few short years, so now is a good time to get ahead of the curve by offering your child a healthy perspective of how credit and debt works.

Involve them in the process of paying your own credit card bills and let them see how much money goes towards interest, how much goes towards the principal balance and how long it takes to pay things off when you only make the minimum monthly payment. Keeping their debt low and credit score high will help them avoid making costly mistakes in the long run.

Ages 16 – 18: Long-Term Saving Strategies & Financial Planning

By this age, your teen will want to begin setting long-term goals and a financial strategy to achieve them, whether it’s their first car or a college education. When saving for a vehicle, help your child to understand the associated costs that go along with car ownership.

Compare insurance quotes and factor in regular expenses like gas, maintenance and the unexpected such as repairs or theft, so they can determine what they can realistically afford on an ongoing basis.

Likewise, decisions about whether they will pursue a postsecondary education close to home or far away requires planning and saving as they budget for the future lifestyle they desire. If their goals feel out of reach, help them to uncover additional strategies such as seeking out a higher paying part-time job, identifying scholarship opportunities, or applying for a student loan. Where there is a will, there is a way.

Money Management Apps for Kids

Financial management for kids doesn’t have to be as dry or daunting as it sounds. Below are just a few well-reviewed financial management apps designed to teach financial independence to children of all ages.

Rooster Money – Start building good financial habits as young as 3 years of age by teaching children how to track their allowances and spending, with an optional Chore Manager feature.

Mazoola, previously known as Chore Check – Instill good habits by teaching children ages 4+ to work, earn and learn about money management, as well as how to responsibly spend, save, and give.

MyDoh – The MyDoh app and Smart Cash Card makes it easy for kids ages 8 and up to learn money management skills with tasks and allowances for earning and trivia for learning.

Greenlight – A debit card for kids and teens that allows them to earn money for their hard work, rewards them for saving, and teaches them how to invest for the future.

The sooner you introduce your kids to responsible money management strategies, the more prepared they will be to enter the real world as financially stable adults. Give them a head start now while the stakes are still low to set them up for success later on!

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