Talking about money is one of the last great taboos in our culture, and this discomfort is often most acute within our own families. We teach our children about sharing, about kindness, and about looking both ways before crossing the street, but we often treat the topic of finance as a complex, adult only subject, to be shielded from them until they are on the cusp of leaving home. This is a profound and costly mistake. Financial literacy is not an innate skill; it is a learned behavior, and the lessons we absorb about money in our childhood, whether they are taught actively or passively, form the bedrock of our financial habits for the rest of our lives. By avoiding the topic, we are not protecting our children; we are leaving their financial education to chance. The question, then, is not if we should teach our kids about money, but when and how. The answer is that the education should start far earlier than most parents think, and it should be an ongoing conversation that evolves in complexity and scope as the child grows.
The first period is the Preschool Years, for ages three to five. At this age, children are concrete thinkers, so the lessons need to be tangible and simple. The right time to start is the moment they begin to ask for things at the store. This is the perfect opportunity to introduce the three most basic concepts of money, earning, spending, and saving. The classic piggy bank is the perfect tool. A clear jar is even better, as it allows them to physically see their money growing. Introduce a simple allowance or commission system for small, helpful tasks. The key is to connect work with earning. When they want to buy a toy, help them count out their own money to pay for it. The most important lesson at this stage is the concept of delayed gratification. When they do not have enough money for the toy they want, the lesson is not that a parent will buy it, but that they must save up for it.
The second period is the Elementary Years, for ages six to ten. As children’s mathematical skills develop, you can introduce more complex ideas. This is the decade of budgeting and making choices. A great tool is the three jar system, one for spending, one for saving, and one for giving. This teaches them that money can be allocated with intention. This is the perfect time to involve them in small scale family financial decisions. At the grocery store, you can discuss trade offs, teaching the fundamental economic concept of opportunity cost, the idea that choosing one thing means giving up another. This is also a great age to open their first savings account at a real bank, showing them how their money can be kept safe and earn a tiny bit of interest, introducing the magic of compounding in its simplest form.
The final period is the Middle and High School Years, for ages eleven to eighteen. This is the critical period where abstract thinking develops. Encourage them to find ways to earn their own money, whether through a part time job or starting a small entrepreneurial venture. With their own earned income comes the responsibility of managing it. This is the time to introduce them to the power of investing. Open a custodial brokerage account and help them invest a small amount of money in a low cost index fund. The goal is to let them experience the fluctuations of the market and learn the long term principles of buying and holding. This is also the time for crucial conversations about debt, particularly student loans and credit cards. Explain the difference between good debt and bad debt. By the time they leave home, they should have a firm grasp of budgeting, investing, and the dangers of consumer debt. This decade by decade approach transforms financial education from a single, awkward talk into a natural and ongoing dialogue.