Teaching Children About Money

According to Cheryl Gorder, author of Dollar Smart Resource Guide for Kids, there is a logical sequence in what kids need to know for their financial education. The sequence is as follows:

1). Recognizing money and its use.

2). Knowing where money comes from and where it goes.

3). Understanding risk, savings and interest.

4). How to make the best personal choices with money.

5). The ethnical dimension to financial decisions.

Gorder goes on to say that the first steps begin with toddlers, teaching them about bills and coins. Preschool children can start to recognize how things are paid, whether it is cash, check, or credit card. They also are very observant about ATMs and believe that all parents need to do to get money is “go get some at the ATM.” This can lead to a discussion of how money is earned, and every child needs to learn how to earn money as soon as they are aware of the concept of earning money and its consequences.

Parents need to spend some time talking to their children about where money goes in the family, otherwise kids have no clue that there are expenses such as utilities, insurance, car payments, and mortgages. Kids should be taught the value of a budget early, and also taught to choose between what is “needed” and what is just “wanted.” Older children need to be taught about risk vs. reward, compound interest, and the ethical consequences to their choices of earning and spending money.

To help explain Compound Interest to your child, click here for a handout.


Links to financial web sites for kids:

Career Kids offers a wide variety of guidance materials for grades K-12.

Young Money is the leading national money and lifestyle magazine for college students and young adults ages 18-25. The magazine provides practical ideas for earning and managing money, smart buying and investing.

Kids’ Savings Calculator shows how much money spent on consumables could be worth if saved instead.

Moneyopolis is designed to teach math skills to middle school students through a financial planning game.

Children and Money – Saving, spending and credit info for both young people and their parents.

It's My Life: Money is sponsored by PBSKids. Learn the basic concepts related to earning one's own money, including practical ideas and the issue of responsibility. Explore the issue further with the "Mad Money" and "Be Your Own Boss" online games, "Making Money" video clip, polls, a quiz, printable word search and journal page and lesson plan.

Jumpstart Coalition for Personal Financial Literacy is a clearinghouse for K-12 personal finance educational materials.

Money Chimp is a site that helps kids calculate compound interest.

Money Instructor teaches money skills and personal finance for K-12.

Money Savvy Generation has tools to teach children about the choices they have for money.

Motley Fool Website is a great place to find all sorts of financial information, calculators, etc.

National Council on Economic Education provides resource for economic education.

National Endowment for Financial Education’s “High School Financial Planning Program” is a seven-unit personal finance program.

NEFE Teen Resource Bureau is the National Endowment for Financial Education’s “Youth Helping Youth” site.

Prodigy Kids’ Money Store is where you can order money-related games, books, banks, etc.

Prosperity 4 Kids provides a child’s financial education book, piggy bank and other resources.

SEC’s “Test Your Money $marts” is an interactive quiz for students developed by the U.S. Securities and Exchange Commission.

Social Security Administration’s Youthlink provide social security information for teens and younger children.

Sovereign Bank’s KidsBank provides tutorials and quizzes on banking, saving calculators and “Ask Mr. Money.”

Stock Market Game is an electronic simulation of Wall Street trading for students in grades 4-12.

Stock Market Investing for Kids provides a list of links which will help kids learn to invest.

Stock Partners is a stock market curriculum for 5th-12 graders.

Student DebtHelp is a great site for students to learn about debt.

StudentFinanceDomain.com teaches about money management as well as paying for college. Students and parents can learn about credit cards, investing,  student banking, spending and protecting. They can also learn about financial aid, student loans, non-loan options and there is information for international students as well.

Teen Vester Books are books that guide teens through investing.

U.S. Treasury’s Page for Kids provides bond, tax and inflation calculators, information on coins and currency, as well as gifts and games.

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