Money-minded moms and dads take heart: An H&R Block study revealed that 75% of teens rely on you as their primary source of financial information.
That’s promising news—especially given that money management isn’t part of the standard curriculum in most schools.
But the reality is that many parents are squandering the opportunity: Research by TD Ameritrade indicates that parents may not be broaching financial topics with kids until they're about 14.
That’s at least seven years after Joseph Cilona, Ph.D., a clinical psychologist based in Manhattan, says kids’ money attitudes—about saving, wants vs. needs, and feelings of empowerment vs. fear—are entrenched.
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Think about that.
You wouldn’t dream of waiting until your kids near the driving age to teach them right from wrong or how to get along with others—so why postpone lessons that can affect the amount of stress, satisfaction and opportunity they’ll have for the rest of their lives?
To help you jump-start these important cash conversations, we tapped money and psychology pros to share their top 12 strategies for teaching kids about money—starting with your preschooler.
3 Tips for Talking Money With Preschoolers
1. Get Creative With Nursery Rhymes
With their funny phrases and catchy melodies, nursery rhymes have been beloved by young children for centuries—making them the perfect vehicle to pass along some solid money advice that kids will remember.
So the next time you need a break from Jack and Jill or Humpty Dumpty, Cilona suggests making up your own rhyme. “Create a simple catchphrase, like ‘See some money? Save some money!’ that you can repeat over and over," he says. "Then tie it to an action, like putting the quarter you found in a piggy bank.”
Your preschooler may not understand the implications of the phrase right away, but—just like “Little Miss Muffet sat on a tuffet”—it may very well stick with her throughout her entire life.
2. Take the Alphabet Approach
If you’re trying to help your toddler learn word and letter recognition, you’ve probably asked him to list all the words he knows that start with the letter “A.” According to Cilona, positive financial choices can be communicated—and ideally, absorbed—in much the same way.
“If a child receives money for his birthday, ask, ‘What do we do when we see some money in our birthday card?’ When he gives the correct response—save it!—provide the same praise and smiles you would when teaching them the ABC's,” Cilona says.
Then, as your preschooler gets older and receives birthday twenties instead of singles, saving should hopefully already be second nature.
3. Play With Real Money
Money lessons don’t always have to be serious. In fact, Cilona says you can teach young kids the value of money simply by swapping out plastic play money for the real stuff—even if it’s just pennies and nickels stocking their toy register.
“Young children cannot think in the abstract—and can’t understand the idea of fake versus real,” Cilona explains. “So when their game is over, create a ritual that empowers kids to deposit the real money into a safe and secure place.”
While seemingly insignificant, Cilona says this action is key in instilling a sense of respect for money.
3 Tips for Talking Money With Grade-Schoolers
1. Choose Your Words Carefully
You might instinctively respond, “It’s too expensive!” when your second grader adds an overpriced gift to her birthday wish list—but Cilona warns against this tendency.
“[That phrase] implies a lack of power or control—and the idea of not having enough. Tying these emotions to money can create associations with helplessness and powerlessness,” Cilona explains. “Financial empowerment is formed by identifying that money can be controlled and managed through thoughtful decisions.”
To rephrase your response—while still communicating the same idea—emphasize that you're making a conscious choice not to overindulge. So instead, try: “I don't think that's the smartest way to spend our money because it costs so much.”
2. Open a Bank Account Together
According to Cilona, kids as young as 5 can benefit from having a bank account—both in terms of learning to save, and understanding that money is worth protecting—making this a smart to-do for your elementary school child.
But since kids can’t truly grasp abstract concepts—like online banking or mobile deposits—until approximately age 10, Cilona says it’s important to stick to tangible interactions. So take your kid to the bank, and encourage her to talk to the teller while making a deposit, or feed her own cash into the ATM.
It’s also a good idea to print out your kid’s monthly bank statements, and explain how the balance can grow over time—provided they don’t withdraw cash, says Anthony D. Criscuolo, a CFP® with Palisades Hudson Financial Group in Fort Lauderdale, Fla.
“Help them understand that their money can be long-term savings they may use one day to pay for college, buy a car, or fund some other big expense,” Criscuolo adds.
For a motivational boost, consider tracking your middle-schooler's savings progress with a visual graph or bar chart you can tape up in his room.
3. Introduce the Idea of Smart Money Choices
Having your kids tag along on errands offers a great chance to teach sound financial decision-making, says Joe Taravella, Ph.D., a clinical psychologist and supervisor of pediatric psychology at NYU’s Langone Medical Center.
Just be sure to use age-appropriate examples. So while the idea of sticking to a budget might be a little over their heads, grade-schoolers can understand that the cereal they've seen advertised on TV tastes just like the generic brand—but costs twice as much. And that's why it won't make its way into your cart.
And remind them: A dollar saved today is a dollar they can deposit into their bank account—and save for tomorrow.
3 Tips for Talking Money With Middle-Schoolers
1. Create—and Track—Savings Goals
Once your kid is in middle school, Taravella recommends building on the financial fundamentals by setting longer-term goals—the kind that require more discipline than simply saving up for an inexpensive toy or treat.
For example, if your child wants to spend the day at the amusement park in a few weeks or buy that mountain bike his friend has, explain that to afford it, he’ll need to set aside his allowance for a few weeks and forego buying a daily treat at school.
For a motivational boost, consider tracking his progress with a visual graph or bar chart you can tape up in his room.
2. Introduce the Benefits of Altruism
Research indicates that giving to others can instill feelings of self-confidence, social mastery and acceptance—important traits for middle-schoolers to cultivate.
But make sure to give kids a choice in how they flex this muscle, so it doesn’t feel like a punishment, Taravella says.
Whether they choose to donate part of their allowance to a charity, or opt to save money and volunteer their time instead, kids at this age can learn a lot from being charitable—including appreciating what you have and the core value of “sharing your wealth” with others in need.
A pleasant result? Studies have shown that charitable people are happier than those who don't give—even if the donation is as little as $5.
3. Involve Your Children in Your Financial Life
Middle-school kids are like sponges—they’re old enough to notice how you lead your financial life, and learn from your actions.
“Be responsible and mindful about how much they truly need to know, but don't hide your money conversations from them,” Criscuolo says.
This can be particularly impactful when it comes to credit knowledge. In a study conducted by the Girl Scouts Research Institute, girls in middle and high school reported feeling fairly confident about basics like saving and spending—but were far less certain about how credit works.
And your lessons don't have to be elaborate. For instance, when your credit card statements arrive, simply invite your kids to review them with you. Point out the important information, including what you’ve bought, the amount of credit that’s available, what you owe, and the effect interest has on what an item ultimately costs.
3 Tips for Talking Money With High-Schoolers
1. Be Transparent About College Costs
It doesn’t matter who’s footing the bill—Criscuolo says high school kids should know how much it’ll cost to attend college.
So once your high-schooler has identified a few schools to consider applying to, help her create a cost analysis spreadsheet, comparing such big-ticket factors as tuition and room and board, as well as expensive “extras,” like meal plans, Greek-life membership fees, and whether the location requires a plane ticket to visit home.
This document can help you segue into a bigger conversation about expenses, when you'll cover how much you're willing to pay, whether they'll need to find a job, or if they'll be on the hook to repay student loans after graduation.
In the study, 80% of teens said they were concerned about their ability to find a job after graduating from college—and nearly 60% feared being financially “worse off” than their parents.
2. Discuss Career Paths, Earnings Potential and Lifestyle Expectations
In the H&R Block study, 80% of teens said they were concerned about their ability to find a job after graduating from college—and nearly 60% feared being financially “worse off” than their parents.
Although a high salary certainly isn’t synonymous with life satisfaction, you can boost your teen’s confidence by helping him research the forecasted demand for professions he's interested in, as well as average starting and long-term salaries.
Then openly discuss how that data “translates” into the lifestyle your high-schooler envisions for himself—or whether he may need to shift his expectations.
“For example, a high-schooler who wants to live in NYC but also loves the idea of being a teacher, would be faced with a very different cost of living than someone in the suburbs of Iowa," Cilona says.
3. Keep the Credit Conversation Going
Once your kid has reached her late teens, Criscuolo recommends giving her some real-world exposure to credit.
“You could provide a card in your name for a kid who’s under 18,” he says, “but make sure they have a new credit card in their own name once they turn 18.”
And although it’s certainly your responsibility to teach your kid how to use credit responsibly—and to always pay off the balance in full each month—encourage your teen to manage the payment process on her own.
“Do not pay the bill for your children—kids should get into the habit of paying their own bills," Criscuolo says. "If they make a mistake, the cost should be minimal—and the lesson learned should outweigh any damage done.”