What Kids Should Know About Money at Every Age
By Abel Pomar
Although there are more than 2,000 Bible verses about money, Ecclesiastes 3:1 stands out for its simplicity in determining when to teach kids about financial stewardship: “There is an occasion for everything, and a time for every activity under heaven.”
Home is the best place for kids to learn about money. After all, parents are responsible for teaching children about the Kingdom of God and how to steward resources given to us.
Plus, most youth don’t learn the basics of financial responsibility at school. According to a recent MarketWatch study, just five states scored an A on a report measuring efforts to improve financial literacy in high schools, and 12 states scored an F, meaning there are minimal or no requirements for personal finance education.
But what should you teach kids about personal finance — and when?
At every stage of a child’s life, there are teachable moments just ripe to translate into lessons about money — something most parents believe is their responsibility. Except that doesn’t happen always — or even frequently. According to Visa’s 2012 International Financial Literacy Barometer, American families talked to their kids about finances less than half of the year: only 25.8 weeks.
This year, you can help your children become Christ-like stewards of money by broaching age-appropriate conversations. By the time they’re adults, you’ll have raised financially literate consumers ready to spend their money — and time — on what matters most.
Here is a compilation of ideas to help you get started and create a process that works best for your family:
Preschoolers and Kindergartners
Even kids at this young age know about money and have questions. They’ve observed you paying for items — and they probably try to convince you to buy things for them every time you’re at a store together. They can learn basic concepts, such as:
- They need money to buy things. This idea is demonstrated easily while grocery shopping, for example.
- People earn money by working. You may want to offer them an allowance for performing tasks around the house.
- Wants and needs are different. You can help them understand the difference and identify it on their own.
- Wants can wait. They should delay buying “wants” until they’ve saved enough money.
Plus, every conversation about money can incorporate lessons about generosity. You don’t have to wait until the holidays to show them that giving is a year-round way of living out our faith.
Kids in elementary school are ready to learn about the financial world. They can grasp the basics of saving, spending, investing, and borrowing. This is a good time to help them set up and manage a basic savings account and practice the lost art of piggy bank savings.
Middle School Students
It’s time for advanced concepts about budgeting, such as maintaining separate accounts for spending, saving, and giving. At this age, kids can start out spending 50 percent of what they earn through allowances or receive as gifts, saving 40 percent, and tithing 10 percent. They can use their savings accounts to set and achieve goals, such as buying a bike or going to an amusement park. Older students can be introduced to advanced concepts, such as budgeting, compound interest, and insurance.
High School Students
Let’s get them prepared to transition to adulthood successfully. They’re ready to dive deeper into advanced concepts and gain real-world experience. Having discussions about the stock market and, if possible, even gifting them with some stocks so they can follow the ups and downs is one way to teach kids this age about the market. By getting a part-time or seasonal job, teens have a serious and tangible source of cash to manage. It also introduces them to the world of payroll and income taxes. To do this, they’ll need to open a checking account and develop the proficiency to manage it. This step can teach them a tandem lesson about the responsible use of debit cards and how to protect themselves against fraud and avoid service fees. Also, before they leave the nest, you’ll want to explore how loans work. A college-bound child applying for student loans will need this lesson especially.
And remember, you can infuse every money talk with biblical principles.
Abel Pomar is President and CEO of the Evangelical Christian Credit Union. He has played a critical role in regulatory compliance change and transformation initiatives across the enterprise. Pomar holds a bachelor’s degree in operations management and a MBA with a concentration in finance.
This article originally appeared in ParentLife Magazine (March 2017) ParentLife.