What Kids Should Know About Money at Every Age

This is a guest post written by FitMoney.

What’s the right age to start teaching kids about money? It’s important to start developing financial habits
early on.

From compound interest and investing, to understanding insurance, to learning to budget, and much
more, financial literacy is more than a math lesson. Instead, we should teach students healthy financial
behaviors as they grow up that enable and equip them for a financially successful future.

Since financial stability is a journey, we’ve put together a guide on what children should know about
money at each age, from before elementary school to their teenage years.

Photo by micheile dot com on Unsplash

Ages 3-5 (Pre-K)

At this age, children are just starting to understand the concept of money. You can begin by teaching them
the value of coins and bills and how to count them. You can also introduce basic financial concepts like
spending, saving, and earning.

A few ideas, topics, and activities include:

• What it means to spend money versus saving it
• The value behind and how to recognize coins and dollars
• Why we save money and the value of a rainy day fund

Ages 5-8 (Early Elementary)

At this age, children are now starting to understand what money is – and its value. Now, it’s important to
understand what it means to have money and choose how to spend it while recognizing how you earn it.
Money moves through our economy every day, but start with recognizing it in your community – from your
neighbors, to your local banks, and at the grocery store.

A few ideas, topics, and activities include:

• The idea that, sometimes with money, you have to choose what to spend it on
• The difference between wants and needs
• Jobs people in your community have and why they picked them
• Visit a bank and open a savings account
• Allow them to pay for something themselves even if they may be disappointed by
  the purchase
• Where are safe places to keep money
• How the government spends taxes to contribute and provide community services like roads,
  social security, and more

Ages 9-11 (Upper Elementary)

Now, children can now start to understand more complex financial concepts. They can understand a
deeper importance to saving money and what spending looks like across different methods. You can also
introduce the concept of philanthropy and show them how they can give back to their community through
volunteering or donation.

A few ideas, topics, and activities include:

• How people make money: wages, salaries, commissions, and tips
• Sales tax and why some purchases are more than the price tag
• What influences spending choices, including price, peer pressure and advertising
• How you use different payment methods, but they all transfer money (using a card or your
  phone doesn’t mean you didn’t pay!)
• The concept of insurance and the financial risk of an unexpected event occurring
• How banks and credit unions make money on your money by charging an extra fee for loans
• Credit scores and how they influence your financial future in qualifying for loans, banking, and
  more

Photo by Katie Harp on Unsplash

Ages 12-14 (Middle School)

As they enter their teenage years, you can start teaching kids more advanced financial concepts like
investing. This is a good time to explore different ways to manage money, from opening accounts to using
credit. A good first activity is to make their own personal budget to accomplish savings goals.

A few ideas, topics, and activities include:

• The costs of education and skills building (tuition, time, etc.) and how experience can influence
  job and salary opportunities
• Entrepreneurship as opposed to being an employee and the potential risks of a business venture
  (working for yourself, no benefits)
• Net income compared to gross income and how we can calculate our take-home pay
• Additional taxes on investments, self-employed income, and other earnings
• Taking out loans and what borrowers have to pay to banks
• Different savings options like checking accounts, savings account, high yield savings account,
  CD’s
• Earned interest (savings account) versus Paid interest (credit cards and loans)
• Compound interest is calculated by multiplying the original amount and previously earned interest
  – good for earning not for owing!
• Insurance and the terms that contribute to costs (premium, deductibles, and copayments)

Ages 15-18 (High School)

Almost at adulthood, you can teach the specifics behind earning income, allocating it, and what all those
numbers on their paycheck mean. This is a good time to explore the world of work and help them with
thinking about their future career goals. You can also teach them about taxes, how they will need to file
their taxes each year, and how to calculate what they will owe based on tax forms.

A few ideas, topics, and activities include:

• How to build credit and responsibly borrow money to build and maintain a good credit score
• How to spot scams and fraud and that they are responsible for any corrections to their credit
  history
• How to buy a car and the hidden costs associated with it
• Calculating a mortgage and what you need to buy a house
• How to talk finances with a friend, roommate, or partner
• Different savings goals: emergency fund, rainy day, vacation, car, etc.
• Non-financial benefits to a job like working conditions, time off, commuting hours
• Changes in the economy and labor market can affect career opportunities and employment
• Inflation and the erosion behind the value of the dollar
• Tax brackets and how the amount people pay depends on their income and type of spending
• Retirement income and growing it from employment earnings and benefits
• What it means to take out student loans and how you’ll pay them back
• The benefits of applying for scholarships, grants, work-study, and more to help pay for higher
  education
• Federal student loans have lower rates and more favorable repayment terms than private student
  loans

Financial literacy is an important skill for everyone, but it’s especially important for kids as they grow up
and begin to make their own financial decisions. By teaching them early on, we can help set them up for a
bright future.

Visit us at fitmoney.org to find the right financial literacy program for you, such as our new $uperSquad program for elementary schoolers or the Financially Fit Certificate program for elementary and high school students.