A family of four playing together.

As a parent, your biggest goal is to ensure that your child grows up to be a responsible adult. A huge factor in that successful independence is financial security — yet surprisingly few parents teach their children the ins and outs of finances. One 2019 survey found that 75% of kids wish their parents taught them more about money.

Instead of leaving your child to the wolves once they hit 18, teaching kids about money should be taught from a young age. And we’re not just talking about occasional lectures.

Establishing a positive relationship with money for kids can’t start early enough. The more we can share with our kids (of all ages) how to lean into finance and not turn away from it, the more financially successful they become.

Adam Laibson, Mainsail Financial Group

Learn about money management for children — and how to include them in your own financial processes as they grow.

1. Introduce kids to money when they are young

Children can grasp numbers starting around the age of 3. So once your toddler hits preschool or kindergarten, start off with some easy, basic introductions to money. Make the experience tangible and give them opportunities to play and explore.

Using tangible money can help them to learn the basics of saving and managing their money before moving into the more “conceptual” space of banking accounts and having money which isn’t physically in front of them. It lets them physically see what they have and think about where they’re going to put that money.

George Birrell, Taxhub

Learning tip:

Under careful supervision, give your toddler some coins to play with. Note how each coin has a different shape, color, size or number. Play a game, sorting the coins by each of these characteristics. Count them together. Then, show your child that you use these coins to pay for things. That snack they want at the grocery store? Give them the coins to pay for it. Use real-life examples to demonstrate that money is a means to receive something tangible in return.

2. Show them how to save money

The concept of saving money should be introduced in elementary school and continually practiced throughout childhood. Create opportunities for your child to earn an allowance. Explore delayed gratification to teach about saving for the long term — rather than continually spending on immediate pleasures.

Learning tip:

Help your child put coins into three containers: One to save, one to spend and one to give. Explain that if they don’t buy the teddy bear now, then they can afford the video game down the road. Your child will learn how to save up for meaningful, more satisfying outcomes. They will also understand that they cannot afford certain things if they blow their money every time they get their allowance. Although feel free to let them blow it all occasionally, just to drive home the point.

3. Demonstrate how to budget money

Budgeting only works if your child has an allowance that is in their control — or are earning their own money through other means. These lessons can begin in middle school. For younger children, try a bake sale. For teenagers, part-time jobs such as babysitting, dog walking or working at the local shop could bring in real income. This will also be a lesson that money earned is directly linked to the work put in — a concept that may be harder for small children to grasp.

Learning tip:

Give your child a place to store their money. Help them open a bank account to support responsible financing.

Introduce your child to the concept of maintaining money in a bank account. Set up a bank account, then teach them how to balance a checkbook and deposit money into a savings account.

Ebony J Howard, RetireGuide

Some banks offer accounts specifically for this purpose. Let your child manage the account and make decisions in terms of withdrawals and deposits. If they overdraw the account, have them pay you a small fee. This will help prepare them for real-world money management.

4. Teach them about debt and borrowing money

Adults struggle with debt, too, so borrowing money wisely is a key lesson for your teenager to learn. Discussing credit and debt management is key to raising a money-conscious adult. After all, good credit history is something that will impact your child’s entire adult life. We suggest beginning in high school with interactive learning opportunities.

Learning tip:

Together each month, pay your credit card bills. Rather than lecturing your child, demonstrate how you handle your own bills. Explain how borrowing works and the added cost of carrying a balance on a credit card. Touch on points such as the consequences of missing a monthly payment or using a credit card when you don’t have the money to pay it off. Talk about your credit score and the opportunities that good credit opens

5. Help them learn how to invest money

What better way to set your child on the road to success, than by teaching them about the risks and rewards of investing their money? In high school, your teenager will hear about the stock market. Walk them through your own investments and explain how savings rise over time while investments can rise and fall. Use graphics to help.

Learning tip:

Have your teenager choose a stock to follow over the next few months and calculate how much they would gain or lose over time if they made an $100 investment. Then help them take a small portion of their savings and invest a designated amount in a stock or fund of their own choosing. Together, go over the pros and cons of the investments they’re considering, and look at the growth over time. Alternatively, let your child put their money in less volatile areas like treasury bonds or a money market account. Talk with your child about how much risk they’re willing to take.

Financial success is learned

Give your child the gift of financial stability. Start off with the basics, then slowly build upon each lesson. By the time your child is a teenager, you will have given them a strong foundation for how to manage their own money.

The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation.