Building Smart Money Habits for Life
Money plays a huge role in our lives, and it’s never too early to start learning how to handle it wisely. Whether you have a preschooler or teenager at home (or both!), understanding money is a skill that will benefit your kids throughout their lives. Here are some age-appropriate ways to teach your children about money so they can develop smart money habits early.
Preschoolers (Ages 3-5):
Even young kids can begin to understand the concept of money. Start by teaching them about coins and their values. Show them real coins and let them handle them. You can play simple games like “matching the coin to its value.” For example, match a penny to the number “1.”
Example: Mom or Dad can give you two dimes and a nickel to trade for a quarter. You’ll see that even though the dimes and nickel are smaller, they are worth the same as the big quarter!
Elementary School Age (Ages 6-10):
Kids can earn money through small tasks like helping with chores as they grow. You can use clear jars to create savings, spending, and sharing categories to assist with their saving. Whenever your child earns money, have them divide it into these jars. This will help your child to learn to save for things they want, spend on things they need, and share with others. Once their nest egg has grown, bring it into the credit union to deposit into their NCACU account.
Example: If you earn $5 for helping with chores, you might put $2 in the savings jar, $2 in the spending jar for something you really want, and $1 in the sharing jar to give to someone in need.
Preteens (Ages 11-13):
This is a great time to understand the value of money and saving for bigger goals. Have your child set a savings goal, like buying a bike or a gaming console. Divide the cost by the number of months needed to save. Your child will be able to see how much they need to save monthly to reach their goal.
Example: If your bike costs $300 and you want to buy it in 6 months, you’ll need to save $50 each month to reach your goal.
Teenagers (Ages 14-18):
If you have teenagers, they might have part-time jobs or earn money from other sources. If so, it’s the perfect time to teach them about debit cards and loans. Explain that a debit card is like a digital wallet linked to their NCACU account. It’s not a credit card, so they can only spend the money they have.
In contrast, explain that loans are borrowed money repaid with interest — and understanding the terms of your loan is essential to avoid getting into unmanageable debt.
Example: If you want to buy a laptop costing $800 but don’t have all the money now, you might consider saving up for a few months or using the money you’ve already saved. If you choose to take out a loan, even if it’s from your parents, make sure you understand what you’re paying in interest and how long it will take to pay the money back.
The Importance of Saving:
Tell your kids that saving is like planting seeds for the future — and a way to have money for bigger things later on. Teach your kids to save a portion of any funds they receive. As their savings grow, they’ll feel proud and more secure.
Example: If you save $10 from your monthly allowance, by the end of the year, you’ll have $120!
Debit Cards vs. Getting a Loan:
Explaining debit cards to kids can be done by comparing the card to using the money in their piggy bank. Teach them that just like using their piggy bank to buy things, a debit card lets them spend money they already have in their credit union account.
When talking about loans, compare loans to borrowing a toy from a friend. Explain that a loan is like borrowing money from someone, but you must pay it back, often with a little extra (interest).
Example: A debit card is like using money from your piggy bank to buy a new video game. A loan is like borrowing money from a friend to buy a video game and promising to pay it back, along with a thank-you gift.
Teaching the Value of Money:
Helping kids understand the value of money means teaching them that money is earned through hard work and making choices. Encourage them to think about whether something is a “need” or a “want.” Discuss how choices about spending affect what they can save for later.
Example: Saving money for a special toy means you might need to skip buying a snack at the store today.
Learning about money is a skill everyone needs.
Take opportunities early in your kids’ lives to discuss money-related topics — and don’t make talking about money taboo! By starting early and moving through basic concepts, kids can develop smart money habits that will serve them well in the future. Understanding the value of money, the importance of saving, and basic financial concepts like debit cards and loans will also give them a head start to financial success.