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How To Teach Children About Money And Financial Responsibility At Every Age

By: Thomas Shara, CEO

Opportunities to teach children about money, and especially about earning and saving money, happen all around us -- at home, school, and during family leisure time. As children get older, they are more likely to make smart financial choices if they already have good habits to fall back on. While schools are also getting more involved, a parent is the first link in the learning process. Understanding at what age children can understand certain topics about money will help you to set them on the path towards achieving good financial habits.

Ages 3 – 6: What Is Money and How Much Is It Worth

Toddlers won't be able to fully understand the value of money, but they can begin to learn the names of coins. Try playing a coin identification game like Magic Money, a free download can be found here.

By age 5 you can expect children to know what bills and coins are worth. Try introducing free apps such as Counting Coins and Bills (iTunes) or Peter Pig’s Money Counter (Google Play). These types of games are a fun way to teach your child how to make change.


Playing “store” is another fun way for your child to exercise his or her imagination and learn about finances. By exchanging play money for goods, your child begins to understand the basics of commerce. You can also start a conversation about saving money by asking your child to help you clip coupons before heading to the supermarket.

Ages 7 – 12: How To Earn Money and How to Spend and Save

As soon as your child starts receiving an allowance, take them to your local bank and help them open a savings account. Lakeland Bank offers a Young Savers Account that can be opened with as little as $1. And we will match the initial deposit up to $10.

Encourage them to save birthday money, allowance, snow shoveling and even earnings made from a yard sale. A good spending/savings model to follow is 60% for immediate spending, 30% for one or two specific longer-term goals, and 10% for giving to charitable causes. As your child’s savings balance grows, you can discuss the concept of interest and how the bank pays people back for saving their money.

It’s important to help children understand the difference between what they need and what they want. Lakeland Bank branch managers conduct Teach Children to Save workshops in fourth grade classrooms throughout North Jersey, which help young spenders learn how to be responsible with their money. The campaign also raises awareness about the important role banks play in helping young people develop positive lifelong savings habits.

Ages 13 – 17: How to Budget Responsibly and Invest Money Wisely

This is about the age when most adolescents apply for their first job or internship. Teens across the country spend about $200 billion each year on toys, games, clothing, movies, live events, arcade games and electronics. Teach your child how to create a budget with their income and expenses and encourage them to start saving for their first car or other big purchases like college.

Learning about credit is most essential at this age, and that includes understanding what a credit score is, how to find it and why it is important. A stored value card can be a simple tool to use that will teach lessons in financial responsibility. Load the card with a set amount each month and let teens budget their allowance.

This is also a time when your teen may become interested in the stock market. Picking stocks, tracking performance and making money can be challenging and rewarding. The market can also be frustrating and risky so to help kids understand the risks and rewards of the stock market, pretend to invest in companies they are familiar with. Make it a family activity to track the financial news and value of stocks.

The Jump$tart Coalition, which champions financial literacy for children, asserts that all young people graduating from high school should be able to take individual responsibility for their personal economic well-being. In 2008, the coalition surveyed high school seniors and found that financial literacy had fallen to the lowest level since testing began in 1998 with a score of just over 48%. This need pushed Jump$tart to develop National Standards in K-12 Personal Finance Education.

Aligned with the Jump$tart standards, New Jersey Department of Education now requires 2.5 credits in financial, economic, business and entrepreneurial literacy. The goal of this requirement is to ensure that students demonstrate understanding about how the economy works; their own role in the economy; and develop the necessary skills to effectively manage their personal finances.

Age 18+

For tips about how college students can manage money, read our blog post on the topic here.

For more information on how to teach your children to save or if you have any questions, reach out to us on Facebook!


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