Teaching kids how to manage their money is one of the most important lessons parents can impart. And it’s never too early to start. In fact, many experts agree that children as young as 3 can start building fundamental financial lessons. And by the age of 7, they can form lifelong money habits, according to a study conducted by the University of Cambridge.
But children develop at different rates, so it’s up to you to decide when your little one is ready. To help you get started, we rounded up 9 tips you can use to teach your kids about money — whether they’re threenagers or on their way to adulthood.
1. Introduce bartering or play pretend store — Ages 3 to 4
Even before your tot enters kindergarten, you can familiarize them with the concept of bartering: exchanging goods or services for something of comparable value.
Try this with toys at first, then consider getting a grocery store playset that lets you and your little one roleplay as a cashier and customer. These playsets typically include a shopping basket, plastic produce and a child-sized cash register you can use to teach how financial transactions work.
As your kid gets a bit older, they may even hone their bartering skills with friends by trading baseball cards, Pokémon cards or other children’s collectibles. (Remember Pogs?!)
As an added bonus, this can also sharpen their social skills. (I’ve never been more popular than when I snagged Ken Griffey Jr.’s rookie card back in third grade!)
2. Teach them about bills and coins — Ages 3 to 7
Once your little one is old enough to understand numbers and their value — and to know not to put money in their mouth! — it’s time to teach them about cold hard cash.
“Children should be taught to recognize currency and specific denominations as soon as they’re able to understand basic counting,” says Mark Daoust, CEO of the business marketplace Quiet Light.
“If you teach a child what a quarter is and that there are 4 of them in a pound, by the time they start school, they’ll have a basic knowledge not only of money but of addition, subtraction, multiplication and division.”
On your next trip to the toy shop, give your child £1 and tell them they can pick out a toy to buy. This is the perfect opportunity to drive home the true value of money — and why they can’t afford that Batmobile Lego set they claim they can’t live without.
3. Start using savings jars — Ages 3 to 7
After your kid finally understands the value of money, get them in the habit of saving any cash they earn, get as an allowance or receive as gifts.
Opt for 3 separate savings jars or piggy banks for:
Spending
Savings
Giving
This will let your child watch their money grow and teach them to keep their savings and spending money separate.
Although some financial experts recommend kids put more money in their spending jar than their savings jar, we suggest maintaining more in the savings jar or a balance between them to underscore the importance of saving for the future.
Ashley Patrick from The Money Mindset Podcast agrees. “I recommend kids 3 to 5 years old put 10% in the give jar, 45% in the save jar and 45% in the spend jar. As they get older, you can adjust percentages based on your child,” Patrick tells Finder.
Once your kid has grasped the concept of glass jars, you can open a kids’ savings account to teach them about interest. (My dad did this for me, and I’m forever grateful!)
4. Debit cards for kids — Ages 5 and up
GoHenry Account - with £20 pocket money and 2 months free
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GoHenry is designed for 6-18 year olds and is made up of a parent account, a child account and a prepaid card. Parents will be notified every time their child spends on their card and you’ll be able to set spending limits so they can only spend a set amount each week. What’s more, you can set chores in the app for your child to complete before they receive their reward payment. It’s also possible to set savings goals to help your child understand the importance of saving and you can take advantage of the Money Missions videos and quizzes to teach your child money skills.
Pros
Full parental control thanks to instant notifications and spending limits
One-month free trial
It can be used by children as young as six
Reward system for completed tasks
Children learn about personal finance in a controlled environment
Relatives can also send money to the children
You can manage up to four child accounts from the same parent account
No fees to spend or withdraw cash abroad - these were scrapped in 2020
Rooster Card Subscription is free for current NatWest Group customers (card for ages 6-17, offer T&Cs and other fees may apply).
If you choose the Rooster Money prepaid card for your child, you’ll be able to decide exactly where your child can and can’t use it. You can also set flexible spending limits and you’ll get real-time notifications whenever your child spends on the card. The app is designed for both parents and children, but children can log into their account to see where they are spending money and to build their own goal pots to save towards. You, as the parent, can also set chores within the app and your child will be rewarded when they’ve completed them.
Pros
Great educational value; a slick app with lots of features to personalise the way you teach your children about finance.
Children as young as 4 years old can use it (6 for the card).
Total control over where your children use the card and how much they can spend.
Safe and secure. The card can be frozen from the app.
No fees for using the card (including abroad).
One-month free trial.
Cons
Annual fee to access the full range of features, including the card.
Parents topping up card limited to 3 loads a day/10 a month for free.
Spending abroad on the card is free up to £50 a month, then it’s 3% of the transaction.
No interest paid on the account balance.
UK cash withdrawal fee
£0
Loading fee
3/day or 10/month free, then £0.50
Replacement card fee
Free for the first replacement (per household), £5 thereafter
Network
VISA
How many child accounts
No limit
Fees abroad
Free ATM withdrawals, 3% of transaction value on purchases over £50/month
This child’s account comes with a prepaid debit card that you can top up with funds through your own Revolut account. You’ll be able to control how and where the money can be spent and you’ll receive instant alerts whenever the card is used. Revolut has added a ‘co-parent’ feature to the account so that 2 adults have full visibility and control over the account. The app allows you to set tasks for your child to complete before receiving some extra cash, plus it has a round ups feature, whereby any money spent can be rounded up and the spare change sent to a savings pot.
Pros
A parent can digitally top up their child’s account with spending money.
Instant parental notifications are generated whenever the child makes a purchase with the prepaid debit card.
Parental controls mean rules can be set on where the child’s card can be used.
The child gets their own account and payment card, which helps teach them financial skills.
The dedicated Revolut
Cons
The parent has to be a Revolut account holder.
If you have more than one child and want more than one Revolut
There are charges for ATM withdrawals exceeding £40 per month.
Once you’re sure your kid has a firm grasp on the fundamentals of money management, consider signing them up for a kids’ debit card. These cards generally fall into 1 of 2 categories:
Prepaid debit cards for kids
Debit cards linked to a checking account for kids
Many kid-centric prepaid cards include monthly fees and mobile apps that let parents assign chores and pay allowances, whereas kids’ checking accounts are free but have less parental oversight. Some kids’ checking accounts also include financial literacy features, but you’re more likely to find interactive educational features, like Greenlight’s curriculum-based financial literacy game, with prepaid debit cards.
5. Involve them in the purchasing process — Ages 5 to 8
One of the most effective ways to boost your kid’s financial literacy is to involve them in the purchasing process. Take your kid to the grocery store and give them a budget to buy a snack. Encourage them to compare products based on price rather than brand names or the artwork on boxes. (I’m looking at you, GoGurt!)
Another way to teach them is by vocalizing your own spending decisions. For example, if you’re buying a bag of salad, you may opt for one brand over another because it’s on sale or has a BOGO discount. Explaining this aloud can help your kid understand the rationale behind your purchasing decisions.
6. Gift-buying and budgeting — Ages 5 and up
If you pay your kid to do chores or give them a weekly allowance, the holidays are a PERFECT time to teach them about budgeting. Buying gifts on a budget requires your kid to think critically about how much they can spend on each person on their list. Help them calculate the total amount they want to put toward all gifts and how much they can afford to spend on each person.
Money-saving expert Andrea Woroch recommends speaking to your kids about budgeting on an ongoing basis. “Involve your children in household budgeting talks, especially when it comes to things or experiences that involve them, such as saving for college, taking a vacation or back-to-school shopping.”
7. Financial literacy workshop — Ages 5 to 17
Many banks and credit unions host free financial literacy workshops for kids in grade school and high school. These programs often include instructions, worksheets and other resources to help children wrap their young minds around basic banking concepts such as fees, loans and interest.
If your local bank or school doesn’t offer these programs, interactive online workshops can help your kid learn to be more mindful about their money.
8. Games — Ages 5 to 13
Popular board games like Monopoly Jr. and Payday involve play money and require careful financial planning to be the winner.
“The Game of Life is great for first and second graders,” says Todd Christensen, an accredited financial counselor and the author of Everyday Money for Everyday People. “However, I recommend the ‘Extreme Reality’ edition of Life since other versions promote gambling and ridiculous income opportunities.”
In addition to classic board games, many modern video games include a financial dimension as well. For example, the wildly popular Nintendo Switch game Animal Crossing incorporates a savings account and a mortgage account that accrues interest when players don’t repay their loan. Playing this game can teach your kid how interest works and the consequences of late payments.
9. Virtual bank accounts — Ages 5 to 14
Another way to kickstart your kid’s financial literacy is to have them play around with a virtual bank account. Apps like Bankaroo simulate the banking experience and teach kids how to manage money without using actual pounds. In some cases, kids can also input their existing balances to make the exercise even more real.
However, these apps require your kid to know how to read, so you might want to hold off on introducing them until they’ve graduated from kindergarten.
Is it too late to teach my teen about money?
It’s not too late to teach your teen about money. If your teen is planning on going to college, it’s the perfect time to teach them how student loans, interest and repayments work.
“Teaching financial literacy in college is simply too late,” says Robert R. Johnson, professor of finance at Creighton University and co-author of Investment Banking for Dummies. “By that time, many students have sealed their long-term fate by incurring burdensome student loans.”
6 ways kids’ debit cards teach financial literacy
Compared to checking accounts, a prepaid debit card can put your kid’s financial literacy on the fast track by teaching them lifelong financial management lessons, such as:
Budgeting. When your child only has a fixed amount of funds on their debit card, they’ll need to be more mindful about what they buy and when.
Savings. Prepaid debit cards teach your child the value of saving for things they truly want rather than hastily buying impulse items. And if the card offers parent-paid interest, they’ll develop an understanding of how interest can help their money grow over time.
Spending. Using a debit card to pay for purchases teaches your young one how to navigate financial transactions online or in person.
Investing. When your kid uses a prepaid card to buy something that will gain value over time, they’ll become aware of their financial future.
Giving. Your child can use their card to donate to charitable causes, teaching them the value of helping those in need.
Chores and allowances. By adding a set amount of money to your kid’s debit card each week or month, they’ll be more prepared to use their paychecks wisely when they enter the workforce.
Bottom line
Helping your kid develop healthy money habits is an incredibly important aspect of parenthood. If you think your little one might be ready to start managing their own money, explore the best debit cards for kids now to compare accounts.
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Michael Benninger is lead editor of banking at Forbes Advisor and a former writer at Finder, specializing in banking. His work and analysis has been featured in Business Insider, Yahoo Finance, GoBankingRates and the Los Angeles Times, among other top media. He holds a B.A. in business administration and marketing from Rowan University in New Jersey. See full bio
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Digital challenger bank Starling has launched a new children’s app for its Kite debit card. This prepaid card for kids comes with parental controls and can be managed from the parent’s banking app.
We have a look at Revolut’s take on a child’s account, which comes with a prepaid debit card and its own app.
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