Financial literacy is a fundamental skill that can shape a child’s relationship with money for life. Research suggests that by age 3, your kids can grasp basic money concepts and by age 7, many of their money habits are already set. This makes early education about finances crucial. As we observe Credit Union Youth Month, let’s explore how parents can raise money smart kids from a young age.
Starting Early- The Power of Childhood Education
By age three, children can already grasp basic money concepts. This early age is the perfect opportunity for parents to introduce simple ideas like waiting to buy something they want, teaching delayed gratification that is vital for financial success.
By age seven, many of a child’s money habits are already set. This underscores the importance of starting financial education at a young age to establish positive money behaviors early on.
Age-Appropriate Financial Lessons
Financial education should evolve as children grow. Here’s a breakdown of age-specific financial activities parents can implement:
- Ages 3-5:
- Savings Jars: Introduce “Saving,” “Spending,” and “Sharing” jars. Encourage children to allocate money received (e.g., allowances, gifts) into these jars to teach the concept of budgeting and prioritizing.
- Waiting and Saving: Use everyday situations to teach delayed gratification. For instance, explain that waiting to buy a favorite toy can be rewarding when they save up for it over time.
- Ages 6-10:
- Decision Making: Involve children in simple financial decisions, like choosing between two snack options at the store based on price and preference.
- Chores and Earnings: Introduce the idea of earning money through chores. Assign a monetary value to tasks to demonstrate the relationship between work and income.
- Ages 11-13:
- Goal Setting: Encourage children to set savings goals for larger purchases, such as a video game or bicycle. Help them create a plan to achieve these goals over time.
- Compound Interest: Introduce the concept of compound interest by showing how saving money in an interest-bearing account can grow over time.
- Ages 14-18:
- Budgeting Practice: Give teenagers more responsibility over their own money by setting a budget for discretionary spending (e.g., entertainment, clothing).
- College Cost Discussions: Discuss the costs associated with higher education and explore different options for funding college, including scholarships, grants, and student loans.
Beyond Saving: SGSG Approach
To raise financially savvy individuals, adopt Jeanie Ahn’s “SGSG” acronym:
- Save: Encourage immediate saving of received money into a savings account.
- Grow: Teach the concept of investment and patience through stories of growth.
- Spend: Emphasize budgeting to prevent overspending and debt.
- Give: Engage in philanthropy to instill values beyond financial gain.
Saving with The Family Credit Union
For parents seeking structured support in teaching financial literacy, consider The Family Credit Union’s Kirby Kangaroo Club. This club offers specialized programs for kids up to 13 years old, encouraging good savings habits early on. There is also a Lil Kirby Roo Club for those under 4 years old. Members of the Kirby Kangaroo Club receive special introductory gifts with each deposit, invitations to sponsored events and contests, and access to fun online activities.
