What’s the best time to talk your kids about money?

As a mother, the last thing our nurturing instinct wants is that our children fail in life due to poor financial behaviours. It is best that our kids learn about money while they are young. So, when exactly is the earliest time to teach our kids about money?

A study on habits forming in children by Dr. David Whitbread and Dr. Sue Bingham at the University of Cambridge report that children develop many of the basic concepts that relate to financial behaviours by age 7. While children may start to understand counting as early as 2 or 3 years old, they often haven’t mastered the concept of equivalence until about age 5.

According to research by the Center For Financial Security, “It has been shown that children make great strides in economic understanding between the ages of 6 and 12, such that children’s understanding is ‘essentially adult’ around age 12.”

So here’s the short answer: the most optimal age to teach your kids about money is age 7.

This is because children at this age already possess the required understanding of basic financial matters. However, this does not mean you can’t start earlier.

And, depending on what age your child is when you’re reading this article, below are a few tips that you can do to start teaching your kids at their particular ages and comprehension levels:

Pre-Schoolers and Kindergarteners

Have a clear piggy bank – Children at this age can perceive changes visually. As you teach them to put money inside a clear jar or piggy bank every day, they will comprehend that the objects (i.e. money) inside the jar is increasing over time. This exercise clearly sets the foundation for saving. This may be the seed in which your children can grow financially.

Show your kids that things cost money – This will teach your children that most things in life are not free. Next time you’re in the grocery store and you see your child reaching for that candy bar by the counter, hand him or her some money to give to the cashier. This will teach them that an “exchange” had to be done so they can enjoy the candy. In this simple exercise, children learn the value of money and its importance in acquiring things.

Elementary and Middle Schoolers (most optimal age)

Teach your children how to budget – Children at this age understand the concept of boundaries. As they follow your instructions to not play in that dangerous area by the park, they grasp the limitations you set for them. Your instructions will keep them safe. Explain to your child that these boundaries are for their good. The same can be applied to money. Having boundaries in their spending will keep them financially healthy.

Highlight the importance of giving – This may be the best financial advice endorsed by the wealthy. Train your child that money isn’t everything. And that there are so many people out there who could benefit from their giving. Explain to them the trap that greed sets for their lives and how giving is a practical and proactive way to curb it. Find something your children really care about in society. Teach your kids to set aside a portion of their allowance to support their causes.

Related read: Help your kids become money-savvy!

Teenagers

Guide them in making their own money – At this age, your children have much time on their hands as they frequently take breaks from school. Help your kids think of ways to make their free time profitable. They can create their own initiatives like having a garage sale, a lemonade stand, a small bakeshop or an online clothes store. They can also start taking odd jobs by washing the car of your neighbours or working part-time at a store. Whatever it is they do, the significance of this work is that they have cash flow coming in directly from their free time.

Introduce investing – Explain to your teenagers the concept of compounded interest – that their money can grow exponentially across time. Show them that their money can profit passively. You can even help them start a portfolio of investments.

Together with your children, research about stocks, bonds, equities, currencies, businesses, etc. and teach them to start setting aside their income for investing. Their best advantage for them is their youth. They have much time on their side to see their incomes profit beneficially.

The bottom line is this: As, your child’s parent, you know what is best for them financially. You yourself can determine what needs to be taught and when it can be taught.

Getting Ready for the Money Talk with your Child

Here are three lessons as to the best time to teach your kids about money:

1. Prepare

Prepare yourself mentally and emotionally. Parents are the first, and at this point, best teachers to their kids. You know your children. You know what works for them best. Take stock of your child’s learning behaviours and correlate them your own financial habits. Think of creative ways on how to impart this to your children.

Talk to your spouse about your thoughts and approaches to this matter. Agree with each other on what is best for your children in their finances. Work as a team and be proactive in teaching your kids about money.

2. Discern

The best way for children to learn is through experience. You and your kids go through multiple events in a day. Whether if it’s at the school’s parking lot, the grocery store, or your backyard, be ready to discern an opportune time to demonstrate simple money lessons to your child. Be creative with your approach. Your child will frequently make mistakes so be patient with them. Use every mistake as an opportunity for them to learn.

3. Teach

Every lesson you give your child is a deposit for their future. Be joyful and expressive in your teaching. Since children learn from their parents best, they imitate who you are and what you do. So if your approach toward money is a negative one, they will imitate this. But if your approach to money is one of respect and freedom, they will imitate you.
Be the best example for your children in money. So that one day when your kids are older, be prepared for tears of joy as they thank you for their prosperity!

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