You can't afford to wait: The importance of raising fiscally fit kids

Money, whether we like it or not, is an important part of life and a topic of conversation you need to start having with your children sooner rather than later. As early as age 3, in fact, because that’s when kids begin to learn counting and comparing.

Many 4-year-olds can understand the concept of shopping and using money to buy things. By ages 5 or 6, children begin to comprehend that you must pay for merchandise before leaving a store. And by the time they turn the corner on their 8th birthday, most kids have started to grasp the meaning of value and can differentiate between now versus years in the future — important lessons for getting them to think about saving for tomorrow.

A study from Cambridge University confirms it: Basic money habits are formed by age 7, and the No. 1 influence on kids’ financial behaviors is parents and primary caregivers. Even more telling: A 2017 T. Rowe Price report that concluded parents who discuss financial topics with their kids at least once a week were significantly more likely to have children who say they are smart about money (64 percent vs. 41 percent). All of which underscores the importance of teaching your kids good financial habits.

Children’s Trust Senior Program Manager Bevone Ritchie, M.S. in guidance and counseling, oversees a wide range of parenting programs across the county.

Not sure how to start? The following basic guidelines will get you there.

Show, don’t tell. With online banking, credit cards and direct deposit, it’s harder than ever for children to physically see — and understand — a money transaction, which is why you need to show them the cash. Many money experts advise starting with three clear jars on their dresser: one for saving, one for spending and one for giving. “Showing” also includes taking them to the grocery store and explaining, as you walk through the aisles, why you choose one product over another. Similarly, take them to the bank when making a deposit or withdrawal or to the library to explain the concept of borrowing — and the cost of late returns. As kids get older, introduce them to some of the great free apps available — such as Bankaroo and Star Banks Adventure — that are designed to teach them the value of money.

Link saving to a goal. Those jars on their dresser are meant for helping your children understand how you accumulate money and where it goes, but unless they have a tangible goal, such as a toy or video game, the concept of saving won’t take hold. By talking to your child about what they’d like to do with their money, you’re teaching them the value of saving. You can also discuss ways to grow your money, such as savings bonds and certificates of deposit.

Do allowance right. Children need to understand that money is earned, and not something simply given to them. So be sure to make clear the things they’re expected to buy for themselves. For young children, this could be snacks at the check-out line of the grocery store, while for tweens and teens it could be jewelry or digital media. The goal here is to have your kids recognize that money is finite — they only have so much and must make wise decisions about how to use it.

Model good behavior. Kids pick up on everything; set a healthy example. If you’re the type that constantly whips out your credit card without a glance at the price of your purchase, your children will notice. Instead, be mindful of what you buy, comparison shopping at the grocery store or checking your bill at a restaurant and recording receipts.

Talk about money. Conversations about what you need to buy versus optional choices are the easiest ways to teach children financial literacy. This includes discussing the concept of budgeting and how credit cards work. And instead of simply stating “We can’t afford that,” which can make kids anxious about money, say “That’s not how our family chooses to spend money.”

Make generosity a habit. Charitable contributions teach children how their money can help others and it encourages them to give.

Facilitate real-life experience. Promote age-appropriate jobs that earn your children extra allowance, such as babysitting a younger sibling or doing extra chores. If they’re old enough to earn money outside the home, all the better. Having a paying job helps teach kids time management and responsibility.

Children’s Trust Senior Program Manager Bevone Ritchie, M.S. in guidance and counseling, oversees a wide range of parenting programs across the county. For more information, visit