Building Smart Money Habits Starts Earlier Than You Think
Before your child reaches second grade, they have likely already developed basic financial habits that can last into adulthood. A 2025 study by the American Bankers Association Foundation found that 72% of consumers believe they would be better off financially today if they had learned basic money management skills at a younger age. That’s why introducing money lessons early is more important than many parents realize.
Set the Example Early
Young children learn by watching you, so the habits you model every day can shape how they think about money for years to come. Kids under the age of five can already begin to understand the simple difference between needs and wants. For example, when you go to the grocery store, take a moment to explain why you’re buying milk because it’s something the family needs, but skipping the package of cookies because it’s a want. These small, real-life moments help make money concepts easier to grasp.
Kindergarten Savings
When a child enters kindergarten, they should have their first savings account. As they grow, help them deposit money from chores or gifts into the account and watch it build year after year. Be sure to guide decisions about how much to save and how much to spend, and explain the consequences along the way. For example, if they spend all the money Grandma sent, they won’t have anything left to add to their savings for the bike they want.
Elementary and Pre-Teen
Elementary-aged children have lots of dreams. Ask them what they want to be when they grow up, what they want to buy, and what they want now versus in the future. Then, start showing them how much they need to save to purchase those goals. As they reach their “right now” goals, you’ll find they begin setting even bigger future goals, like saving for a car or college.
Teenagers and First Paychecks
As a teen, teach your child the importance of having money before spending. Talk with them about balancing their accounts and keeping track of their spending and withdrawals. Also, help them understand what happens if they don’t maintain a positive balance. Don’t be too quick to bail them out. It’s much easier to help them fix issues now before they turn into bad habits in the future. Sign them up for online and mobile banking and show them how to use the free money management tools to track spending and make goals.
Family Financial Conversation Starters
Help your kids build strong money habits by focusing on these essential financial pillars:
- Earning: Show your kids how they can make money by helping with chores and taking on small jobs around the house.
- Borrowing: If your child wants something but doesn’t have enough money, talk about how they can borrow it from you. Be sure to explain how they will pay it back so they begin to understand credit early on.
- Spending and Saving: Work on a family budget together and track monthly expenses. Focus on needs (home, utilities, food, gas, etc.) and wants (streaming services, dining out, etc.). Choose something to save for as a family, like a vacation or a new camper. Give kids the chance to decide what they want, and they may choose to forego adding more money to family savings.
- Financial Decision Making: Do you need to make a financial decision, like paying for car repairs or purchasing a new refrigerator? Let the family help decide how to make the monthly budget work with these unexpected expenses.
Don't be afraid to lean on your local banker. We love helping families, especially young people, get on the path to sound financial wellness.
Disclosure:
The information provided is for educational purposes only and is not intended to provide specific financial advice or recommendations.
