If you're going to give a kid $20

It should come with a good story.

Nov 16, 2021

(Anyone else really feeling the urge to buy all the things? I wonder if it’s a combination of the season with boredom and cabin fever. I’m going to have to write about it.)

Let’s talk about money and kids. You may have kids or you’re like me and have kids in your life whether they’re nieces, nephews, godkids, your BFF’s kids, grandkids or generally kids in your life. At some point (like, now) we’re going to have to talk to them about money or at least mirror good money habits.

So why am I focusing on this topic right now? Mostly because I’m holiday shopping for the kids in my life so it’s top of mind, I get asked this question, it’s Financial Awareness Month, and, well, because I want to talk about it.

Let’s acknowledge that for some of us, talking about money is hard. We’ve either never talked about it so don’t know how to or it was a taboo subject in your family. I maintain that talking about money can be healthy and can help set up good habits not just for kids but for adults as well. I talked to Nancie Taylor, a senior wealth advisor at Meridian who specializes in working with families about how to talk to kids at any age about money.

Taylor says it’s never too young to start talking about, teaching and mirroring good money habits to kids. She provided a breakdown by age:

Three to six years

At this age, talking about money should be visual, says Taylor. “The more you show kids things related to money, the more they will absorb. It's very difficult for young kids to understand delayed gratification, so you have to be a little bit more creative and make things more visual so young children can understand having a goal and working towards it.”

She suggests using a clear jar with a line marked on it. “You want to tell your child to fill it up to that line. And then once it reaches that line, then they can put it towards a specific toy they want,” she says. “So that they have a visual of it accumulating and they get that feeling of accomplishment as the money jar goes up.” Then they can use that money towards a goal like a new toy.

(Not going to lie, I use this method for my spare change and I’m far from being a kid.)

Seven to 10 years

This is the age when they can learn through trial and error, says Taylor. She says children are understanding what money can buy and the value of coins versus bills. They’re still going to need the visual aids. “So it's a good idea to stick with a jar at this point, but maybe increase the number of jars, so perhaps give your child one for day-to-day spending, one where they can buy bigger ticket items and even a third one for charity.” This helps them understand the concepts of different kinds of savings tools.

11 to 14 years

This is the time where you want to expand their knowledge of the variety of uses of money. Taylor says that this is when they can learn about saving for short- or long-term items like university or a phone.

This is where the two (or more) of you can open a youth account with them. “They start feeling a little bit more grown-up,” she says. They can start learning about compound interest and check their accounts to see their savings grow.

Those are the actions we can take but Taylor says what’s just as important is telling stories about money. Not the fantastical ‘if I won the lottery’ kind of stories but stories about how you manage your money, successes and failures.

“Sometimes it's just about having great conversations with them, the things that you're really happy with and you did financially well in your life and things that maybe you learned from when you didn't make the best financial decisions,” she says. “All those storytelling conversations we have when we're one-on-one with family members resonate and they'll remember them later.”

If you have kids in your life, you know they’re always listening and absorbing what they’re hearing so tell stories about your financial successes and failures.

It’s a common tactic in the financial industry. “This is how we share stories with clients, ‘As you know, I have other clients like you and this is what happened.’ You could sit there and tell them financial jargon but it's not going to resonate like the great story does right?”