Teaching kids about money, stage by stage

Start with four small ideas

The U.S. Consumer Financial Protection Bureau (CFPB) groups its "Money as You Grow" guidance into three stages: young children, school-age children to preteens, and teens to young adults. For young children it names four core ideas: earning, saving, planning and shopping.

In its words, you need money to buy things and you earn money by working. You may have to wait and save before you can buy something you want. Every time you spend money, you make a choice.

Those sentences are short enough to say out loud at the grocery store. That is the whole curriculum for a preschooler.

A stage-by-stage guide

The table below pairs each stage with one thing to try. The stage names follow the CFPB. The activities are practical suggestions, not CFPB requirements, and every child moves at a different pace.

Young children: talk while you shop

At this stage you are mostly narrating. Say what things cost. Point out that you are choosing between two cereals. Let them pay the cashier.

Nibud, the Dutch national budget institute, names about age 6 as a sensible time to begin pocket money, because kids can recognize the different coins by then. That is one country's guidance, and it describes a starting point rather than a rule.

If you want a read-aloud route, the CFPB lists a "Money as You Grow Bookshelf" for ages 4 to 10 that adds money topics to story time.

School-age kids: add a small, steady amount

Once a child can count change and wait a few days for something, a regular allowance gives them real choices to practice with. A common starting point is 50 cents to $1 a week for each year of age, a rule of thumb described by both Acorns and Wealthsimple.

You will find the Dutch numbers, by age, on the allowance by age page. For how to set one up, see how to start an allowance.

• Keep the amount small and the payday predictable.
• Decide up front what the allowance covers, so nobody is surprised later. What allowance should cover walks through that choice.
• Let them spend some of it on something you would not have bought.

Preteens: introduce trade-offs

Around the upper primary years, kids can often handle questions like "Do you want the new thing now, or the bigger thing in a month?" A savings goal makes that concrete. Our guide to savings goals for kids shows how to set one up.

This is also a good age to talk about wants versus needs. The wants vs needs page has conversation starters.

Teens: hand over more of the budget

By the teen years, an allowance can grow to cover a category of spending the teen manages alone, such as phone credit, lunches out or clothes. Nibud reports that Dutch teens aged 12 to 18 typically receive between €20 and €50 a month, rising with age. Its figures describe what kids usually get, not advice.

The CFPB's third stage runs from teens into young adulthood, which is a reminder that the goal is a capable adult, not a perfect teenager. Read more in allowance for teenagers.

What matters more than the exact age

• Consistency: pay on the same day, in the same way.
• Honesty: if you say you will talk about money, do it, including your own choices.
• Room to err: small mistakes at ten cost little. See letting kids make money mistakes.
• Patience: skills build slowly, and a kid who is stuck at one stage is not behind.

If you want somewhere to keep the numbers, a free tracker such as Pouch keeps a pretend balance on your phone, with no real money moving. A paper notebook works just as well.