Financial Literacy: Age-appropriate Conversations for Your Family

sequoia-logo-sm
by Sequoia Financial Group
sequoia-logo-sm
by Sequoia Financial Group

This month, graduates of all ages will celebrate significant milestones in their educational journeys. With this in mind, now is an ideal time to start or deepen conversations with your children about money. Teaching financial literacy helps children develop healthy financial habits that will benefit them throughout their lives. As your child grows, your financial discussions should evolve to match their age and understanding. Here are key topics to discuss at different stages of their development.

Early Childhood (Ages 3-7): Understanding Money Basics

At this stage, children are beginning to recognize the concept of money and its role in everyday life. Start with these foundational conversations:

  • Identifying Coins and Bills – Teach them to recognize different denominations and their values.
  • Earning and Spending – Introduce the idea that money is earned through work and is used to buy things.
  • Saving vs. Spending – Give them a piggy bank and encourage saving for small goals.
  • Needs vs. Wants – Help them distinguish between essential items and things they desire.

Middle Childhood (Ages 8-12): Developing Money Management Skills

As children grow, they can begin to understand more complex financial concepts:

  • Allowance and Budgeting – If you provide an allowance, teach them how to allocate it between saving, spending, and giving.
  • Comparing Prices – Show them how to compare prices while shopping and understand the value of money.
  • Introduction to Banking – Open a savings account and teach them how interest works.
  • Delayed Gratification – Encourage saving for bigger purchases rather than impulse buying.

Teen Years (Ages 13-18): Preparing for Financial Independence

Teenagers are on the brink of financial independence and should be equipped with real-world money skills:

  • Part-time Jobs and Earnings – Discuss earning money through babysitting, part-time work, or summer jobs.
  • Budgeting and Expense Tracking – Teach them to create a simple budget and track their spending.
  • Credit and Debt Awareness – Explain how credit works, the dangers of debt, and the importance of a good credit score.
  • Saving for Bigger Goals – Discuss saving for a car, college, or other major expenses.

Young Adulthood (Ages 18+): Mastering Financial Responsibility

As they transition into adulthood, young people need to understand advanced financial concepts:

  • Managing a Bank Account – Teach them about checking accounts, overdraft fees, and online banking.
  • Building Credit Wisely – Guide them on responsible credit card use and credit score management.
  • Understanding Taxes – Explain how to read a paycheck, file taxes, and understand deductions.
  • Investing Basics – Introduce the concepts of stocks, mutual funds, and retirement accounts.

Final Thoughts

Financial literacy is a lifelong journey, and having age-appropriate discussions at every stage of development prepares children for a secure financial future. By instilling good money habits, you empower your children to make informed financial decisions and build a solid foundation for adulthood.

The views expressed represent the opinion of Sequoia Financial Group. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Sequoia believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sequoia’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. Past performance is not an indication of future results. Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.