How to teach money lessons based on your child’s age

All parents want their children to be happy, healthy and successful. Teaching them from an early age how to manage their money, live within their means, and the importance of saving can make a big difference in their lives.  

Start early
When they are about 3 years old and start saying, "I want this" or "I want that", you can give them a weekly allowance. The amount can be based on their age or whatever you can afford.

Get 3 boxes or plastic containers. One should be labeled SAVE; another GIVE and the third one SPEND. For every dollar that you give them, 20 cents should go into the SAVE box and 10 cents into the GIVE. The 70 cents left can go into the SPEND. This way, they'll learn from an early age that you cannot spend all the money that you have at once.

Pay extra for some chores
When your children are between 9 and 12 years old it's time to teach them about earning money. Make sure that the chores you pay for are not part of their daily responsibilities such as making their bed or walking the dog. Extra chores could be washing the car, mowing the loan, cleaning the kitchen cabinets, for example.

This could also be a good age to teach them about entrepreneurship. If they like to bake, they could make muffins or cookies and sell them to neighbors or extended family.

My 9 year-old niece made rubber band bracelets and sold them for a dollar. Of course we all bought one or two!

Teens and debit and credit cards
When your children are teenagers, you can open a bank account and let them have their own debit card. This will start teaching them about banking, the difference between debit and credit and most of all, budgeting so that they don't go below the minimum balance and end up paying fees.

Understanding budgeting
Ask them to make a list with their fixed expenses such as transportation and money for lunch. The other list should be for non-fixed expenses such as clothing or entertainment. This way, they'll have a good idea of how much they can spend after all expenses and savings goals are met.

As I often say, actions speak louder than words. If you want your children to manage their money successfully, you must start by setting a good example. 

Yamila Constantino is a pioneer of financial education for Latinos. She is a member of the National Financial Educators Council Advisory Board and a winner of the US Hispanic Chamber of Commerce At the Table award for women entrepreneurs.

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