Teaching Money Management Skills

Handling money is a learned skill; one that you need to start early continue moving forward. As your young children grow, so does their capacity to understand more complex financial practices. By carefully expanding their learning through the teen years and into early adulthood, you can help them learn important lessons before they take flight in the real world.

When you break down the elements of money management for kids, foundational skills are really as simple as learning how to make good financial decisions, having opportunities to practice, and learning what works and what doesn’t. And since the adult world isn't often forgiving of financial mistakes, you want to give them every advantage from the start.

Ready to begin? Here are our age-appropriate lesson suggestions for nurturing a strong foundation in financial literacy and management for your kids.

Early Childhood

Young children are concrete thinkers. They’re still learning the basics of life, like what things are called and how to do simple tasks. For this age group, focus on activities that deal with similar fundamentals of money and make it directly relatable to their everyday experiences.

• Ask them to identify the different kinds of coins and paper money.
• Play games or puzzles involving numbers together.
• Use pretend money for play activities like pretend grocery shopping or restaurant dining.
• Keep a change jar, and let your child sort and wrap change for deposit.
• Let them collect state quarters in a map-format coin holder. Have separate sets sorted by mint mark.
• Let them earn change for tasks.
• Let them make small purchases at the store using their money.
• Discuss money in a positive light — how you can earn it, and how you can use it.
• Encourage questions and interest in money and financial concepts.

Late Childhood

While children are still learning labels and processes at this age, they’re also figuring out that processes may be reversible or alterable. They’re becoming more aware of how to compare concepts, focus on more than one element of a task, and see relationships among items or tasks. This is a good time to introduce more logic-based activities using math, puzzles, and games.

• Teach them how to play Monopoly for fun.
• Help them open a savings account either in person or online. (Children cannot open an account independently until they’re 18, but you can help them open a custodial account.)
• Give them more money-earning opportunities and tasks.
• Explain the concept of interest for both saving and borrowing. When they ask to borrow money, explain what an advance is and introduce the concept of interest. Likewise, consider matching funds for money saved.
• Encourage them to know what they’re going to buy and do comparison research in advance when spending
• Encourage them to pay themselves first by putting a portion of their allowance in savings.
• Help them sell or donate items they no longer want or need.
• Teach them about scams and how to identify too-good-to-be-true offers.
• Let them help you do the weekly shopping or create a grocery budget based on recent trip purchases.
• If you give them spending money for school activities, let them keep unspent funds to encourage frugal spending habits.

The Teens

When your kid becomes a teen, they become more capable of handling abstract ideas and developing problem-solving skills. They can analyze problems and look at information to decide what is relevant and what it not. This is a time when kids are anticipating getting their driver’s license and taking on a part-time job.

• Consider prepaid, reloadable debit cards for disbursing allowances or earnings, and teach kids to maintain a simple ledger to track expenditures and balances.
• Expand their budgeting tasks to distinguish between needs and wants.
• Have a discussion about online subscription accounts.
• Encourage saving with a plan for large-ticket items, recreational experiences or educational expenses.
• Be transparent about how much their car insurance costs — monthly, quarterly, semi-annually and annually.
• Encourage a part-time job that doesn’t conflict with school responsibilities, and teach them how to read paycheck stubs.
• Give them a view of your basic monthly financial responsibilities — mortgage or rent, utilities, car payments and various types of insurance — and how you manage them.
• Teach them the concept of cash flow — income versus expenses on a timeline.
• Have them plan a dream trip by researching flights, car rentals, attractions, and restaurants, for example.
• Address cybersecurity and the rules of protecting personal financial information.
• Assist them in filing for financial aid for post-secondary education.
• Introduce the idea of credit scores and how they affect financial planning.

Early Adulthood

A child may graduate from high school, but the leap into adult financial responsibility comes at a time when brains are still refining analytical and reasoning abilities. Meanwhile, young adults have to start making financial decisions that will impact the rest of their lives.

• Guide them in establishing weekly, biweekly, and monthly budgeting.
• Help them open a checking account, and show them how to maintain a ledger and track expenditures, deposits, and balances.
• Encourage them to get a credit card, and teach them what using it responsibly entails — paying off balances monthly.
• Stress the importance of setting up savings and retirement accounts starting with their first real job.
• Help them review a potential lease or mortgage to ensure they understand the terms and conditions.
• Refer them to reliable online financial resources like loan and mortgage calculators.
• Share reputable online resources that can help develop their financial literacy to match their needs, career, and lifestyle.
• Make sure they understand the differences between a bank and a credit union.
• Financial Education for Kids at La Capitol Federal Credit Union
• Having a dependable financial institution that you can trust makes all of this easier — whether you’re taking a child for their first deposit or setting up accounts as you send them off to college. Learning how to manage money is the key to becoming a financially responsible adult.

You and your entire family can gain financial foundations with the La Cap education platform, Knowledge of Financial Education or KOFE.

With KOFE, you'll have access to a treasure trove of interactive courses, educational videos, webinars, podcasts, quizzes, games, and more. Learn at your own pace, whenever and wherever you want, with the tools that work best for YOU!

Visit the KOFE website today to get started: https://lacapitolfcu.kofetime.com

If you’re looking for a supportive financial partner, La Capitol Federal Credit Union has financial tools to help. Explore our youth accounts and education center today to get your child on the path to financial independence.