7 Essential Money Lessons Every Child Should Learn

Teaching kids about money doesn't have to wait until they get their first job. Mountain America Credit Union believes the earlier you start, the stronger the foundation will be when your children are managing their own finances. Think of financial education as a long-term investment—each lesson builds on the last, giving your children time to practice and grow their understanding along the way. These seven money lessons can grow with your children, adapting to their age and maturity level. Start with the basics when they're young, and by the time they're ready to take full financial responsibility, they'll have the confidence and knowledge to make smart money decisions.

1. Give them an allowance.
   It's more than just money—it’s a lesson in money management. Whether you give an allowance as payment for chores or a set weekly or monthly amount, show your kids how to save and how to keep track of what they earn. A jar or piggy bank is perfect for your little ones, but your teen is probably ready for a bank account and debit card.

2. Teach them how to budget.
   Explain the ins and outs of spending and saving. When they find something they want to buy (a toy, a movie ticket, a pass to an amusement park), encourage them to make a plan to save for it. Need help? A visual aid can make it easier to understand for younger ones. Get three jars and label them for spending, saving and giving. Talk with your child about how their allowance or gifted money will be distributed between the jars. Older children can use a notebook, computer or their banking app.

3. Show them that everything costs money.
   If you have young children, you know the routine—they ask for everything they see! While kids quickly learn that Mom and Dad are the source of all good things, they don't always understand that money is what makes purchases possible. Show them how their allowance compares to the cost of what they want—that toy costs three weeks' worth of allowance, or that video game will cost a month's worth of saving. Then guide them through setting priorities. If they are saving for something, like a bike, how does spending a little bit of money on a toy today affect that? It means waiting longer for the bike. Which one matters more to you? This teaches them that every purchase is a choice, and choosing one thing often means waiting for another.

4. Explain the importance of homework.
   Once your child is ready to purchase something, don't just hand over the money— turn it into a learning opportunity. Show them how to shop smart by doing their homework first. Teach them to read reviews, compare prices and look for sales or discounts. This research process helps them understand that being a smart shopper means getting the most value for thier hard-earned allowance, and it's a habit that will serve them well throughout their lives.

5. Give them the power to make their own decisions—and mistakes.
   Teaching your children about money can be challenging. You want them to make the right decisions and be done with it. But to truly understand, your children have to put these principles into practice. Talk about what they want, advise them and then let them make the final decision. If it goes wrong, gently help them figure out where they could have made better choices.

6. Introduce credit cards with training wheels.
   It's not unusual for teenagers to have a credit card before they graduate high school—it's usually tied to a parental account so an adult can monitor their spending while they learn the ropes. Start with a low limit so they can't do too much damage while they're figuring things out. This is a great time to talk about how credit cards and interest rates work, and explain the real dangers of accumulating debt.

7. Be the example.
   Like it or not, your kids keep a very keen eye on everything you do. Show them how to make smart financial decisions by involving them in your plans. Let them vote on what to save for and then let them see you doing it.

Being a positive, guiding force in your child’s life and teaching them these basic financial skills will carry them into adulthood with a solid understanding of how to make it on their own. Congratulations, you’ve got yourself a financially literate member of society. Good job!

Learning about finances can be fun—even for adults! If you have questions about credit cards, auto loans, checking accounts or any other banking products, please contact us. We’re available by phone, online or in the nearest branch.