One of the greatest joys of being a parent is watching your little one grow. Every day presents a new learning opportunity, from grasping basic commands and emotions to understanding names and places. While young children might focus little on money, they often start with simple concepts like counting coins and exchanging money for things they want. At Elements, we understand the importance of building a solid financial foundation for kids, and that journey begins with you! In this article, we’ll explore ways to discuss financial education at every stage of your child’s life. In addition, we’ll share real-life strategies from parents that you can use in your own home.

When does the conversation about money begin?

It's never too early to start talking to your child about money. While you don't need to introduce them to complex financial concepts, familiarizing your toddler with what money looks like is a good way to start that journey. Whether your child is entering preschool or graduating high school, their relationship with money will play a significant role in their financial independence.

Elements has gathered data, stories, and valuable advice from parents, organizing them by age group to help you educate your child about money at each stage.

Ages 1-6: Introduction to Money

At this age, children are starting to understand that money is earned through work and is used to buy things they want or need. When it comes to teaching your preschooler about money, it’s best to keep things simple.

• Play interactive games like “restaurant” or “grocery store.” – These activities not only fuel your child’s creativity but also provide early lessons in managing money.
• Know what’s appropriate to discuss. – You don’t need to share every detail about your financial situation, but sharing what is affordable for you and your household could be a good start for a young child.
• Start investing early. – The sooner you begin saving for your child, the better! Opening a savings account and setting aside money is simple and will benefit your child in the long run. You may also consider a 529 Savings Plan to help with your child’s college expenses when the time comes.

Ages 7-12: Earning, Saving, and Spending

Cash isn’t as common as it once was. Nowadays, people receive their earnings through direct deposit and use cards for daily purchases. It’s even becoming normal for preteens to receive their allowances or birthday money through an online banking account. Whether you're helping your child manage cash in a physical piggy bank or a digital account, here are a few tips to guide you through this stage:

• Be transparent about spending. – Children at this age understand how money is obtained. They may not be aware of all the household expenses, but it's important to establish boundaries and be willing to say no. If your child is asking for something that isn't in the budget, it's okay to be honest with them and suggest alternatives.
• Reinforce that money isn’t just a card. – While there’s nothing wrong with giving your child a debit card, they should be reminded that money is still a real thing, even if it’s not in the form of paper bills. Note that money can come in various forms, like checks and digital payments. Helping them understand this broader picture will give them a better idea of how money works.

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Ages 13-17: Encouraging Financial Independence

Watching your child enter their final teenage years can be both rewarding and bittersweet. At this stage, you’re preparing them for financial independence. We understand that letting go can be tough, but allowing them to make their own decisions is key to fostering their independence. Here is some advice to help you prepare your teen for a successful financial future:

• Keep track of their expenses. – Teenagers often start working part-time jobs at this age. It's an ideal time to help them set up their own bank account to manage their earnings. You can also keep access to the account to monitor transactions, transfer additional funds, and more.
• Hold them accountable.—It's important for children to understand the difference between wants and needs. If you find your child constantly asking for more money, you may need to review their spending habits.
• Start discussing credit. – Teaching your teen about credit can set them up for financial success. Consider adding them as an authorized user on a credit card to help them establish credit early.

Ages 18+: Supporting Your Adult Child

Your child is officially an adult, but that doesn’t mean the lessons and guidance should stop. Now that they’re all grown up, it’s time for you to let them take the lead while you hold their hand in support. Here’s how you can continue to encourage your adult child as they navigate being independent:

• Continue having conversations about money. – Focus on being a guardrail for your adult child while they learn to manage money independently. Be by their side to answer questions and provide resources to help them earn and save money.
• Allow them to make their own decisions. – This is the time for your child to explore independence. While mistakes are a natural part of growing up, continue to offer your support and allow them to make their own choices. 
• Monitor their activity. – Consider setting up a joint account with your adult child to monitor all account activity. This will help hold them accountable and make it easier for you to transfer funds into their account as needed.

Have questions or need advice to share? Our experts are here to support you! Contact Elements Financial for support in all aspects of your financial journey.