Money + Kids Part II: Teaching Kids Under 13 Financial Basics

About the Episode

Think kids under 13 can’t learn financial basics? Think again! In Part II of our Money + Kids mini series, Cristina and Will learn tips and tricks for teaching younger children important money lessons. From explaining the differences between saving, spending, and giving to helping connect the dots between working and earning a paycheck, our guests, Clint Proctor from The Wallet Wise Guy and Karina Rodriguez from Addition Financial, provide great information for parents with young children. Help your kids become responsible financial experts after listening to our latest episode!

8:05

Cristina asks Question 1: “What is the right age to start teaching kids about money and financial basics?” 

Karina responds: “The sooner the better. It’s important to show children what healthy habits look like at a young age when it comes to money. Even when you think they’re not old enough to learn, your kids still watch the way you spend and handle your finances. Talking to children about money will help them build long-term healthy habits in their teenage and adult years. Kids see their parents as role models so it’s important to carry out these habits yourself as well.”

Learn more: 7 Frugal Living and Money Saving Tips for Every Age

9:10

Will asks Question 2: “How should parents handle using plastic in front of their kids?”

Clint responds: “I always try to include my son whenever I take trips to the bank to teach him about credit cards. After depositing money in the bank, I tell him that the money goes straight into my credit card. I teach him that if I don’t put any money in the bank then I can’t use the credit  card. In his simple mind, he thinks the money is in a physical location and not in a virtual account. But that’s okay as long as he understands that I can’t use the card without putting money in the bank first. I also tell him that using a credit card doesn’t go on forever and I can’t spend an unlimited amount of money with a credit card.”

11:55

Cristina asks Question 3: “When should parents start to give kids an allowance?”

Karina responds: “I think five or six is a good age to give kids an allowance. I think allowances are amazing because they enable parents to get help and they also teach kids about money. It also helps children realize the value of money and what it means to work for it. Growing up I started receiving more responsibilities so my allowance also grew in return. Therefore, I think allowances are a win-win and it’s a great way to teach your kids about working hard and earning money.”

16:00

Will asks Question 4: “When it comes to teaching kids about spending the money they save, what are some tips that parents can use?"

Clint responds: “Right now I’m trying to teach my son the concept of compound interest and how saving money can benefit him in the long run. We made a promise to match the amount he saves if he keeps his money for a certain amount of time. This method has helped him understand the value of delayed gratification and saving up for emergencies. It also teaches him about compound interest and the power of free money.”

18:25

Cristina asks Question 5: “I know a lot of parents want to teach their kids about charitable giving. What are your recommendations for doing that?"

Karina responds: “Although I’m not a parent, I think finding a charity that your child connects with is a great way to teach them about charitable giving. For example, a lot of kids get excited when they know their money is helping people – especially other kids. Finding an organization that is relevant to your child can help them build charitable habits over time.” 

Clint follows up with: “Allowing my son to pick out tangible items with his money has really helped him understand the concept of charitable giving. Since our family is very involved in many Christmas giving charities, my son loves going out to the store and shopping for other kids. We also let him spend his money on food for local charities. I can tell he gets more satisfaction from seeing people benefit from his charitable actions instead of having us withdraw money from his account.”

20:30

Will asks Question 6: “When should parents open a bank account for their kids?"

Clint responds: “I think 11 or 13 is a good age to open a bank account for your kids, especially if they’re earning a consistent allowance at that point. It also helps them earn interest over time when they get a job at 15 or 16. At age 13 you should teach them how to balance a checkbook or a budget."

Learn more: When & How to Start Contributing to a Child Savings Account

22:00

Cristina asks Question 7: “Karina, being a youth ambassador for Addition Financial, what kind of helpful resources does the credit union offer to parents?”

Karina responds: “Awesome question! We offer a fun bucks and a fun savings program at Addition Financial. This program enables your child to deposit money at the bank and earn interest over time. Every time they deposit money at the bank they’ll receive a fun piece of artwork they can color in and submit for different theme parks and gift card giveaways. It’s also a fun way to teach your kids the difference between a checking and a savings account.”

Learn more: Fun Bucks 

24:05

Cristina asks Question 8: “One of the things that I think is so important for kids to understand is the connection between work and money. We talked about that with chores, but what about working for a living?”

Clint responds: “It’s important to teach kids as they get older that nobody gives you money for free as an adult. You should teach them that if you’re not willing to work hard then you’re not going to financially afford the things you want in life. I constantly talk to my son about what I do for a living because it’s hard for him to understand since I’m always writing on my laptop. I’ll show him emails from my boss and explain that I get paid to do things for people and that’s how we can pay the bills. I tell him that one day he’ll also get a job where people will pay him to do things for them so he can buy a house and a car. I also tell him that none of these things are free and that everything costs money. There’s no single formula to make your kid understand how money works. I recommend an ongoing conversation to help your child understand the value of saving money and hard work.”

26:55

Will asks Quick Question 1: “Since today’s kids are digital natives, can you talk about some apps that can help parents teach young kids about money?”

Clint responds: “There are so many great ones out there that I highly recommend. Savings Spree is great for young kids since it teaches them the value of saving. The iAllowance app is great for helping kids keep track of their allowance money. For slightly older kids, Bankaroo is an app that can teach them how banking works. Goalsetter and FamZoo are also good options when your older kids get their first phone.”

28:10

Will asks Quick Question 2: “What was the first thing you bought with your own money?”

Clint responds: “The first thing I ever bought after getting a job was probably a Chalupa from Taco Bell. Another item was ankle weights because I wanted to jump better and I knew my parents would never buy that for me. However, my first major purchase was a laptop.”

30:20

Cristina asks Quick Question 3: “When should parents teach kids about budgeting?”

Karina responds: “I think 10 or 11 is old enough to understand the basics of budgeting. The spend/save/give split we talked about is a good jumping-off point for them to understand what a budget is and how it should realistically look.”

Learn more: A Household Budget: Average Monthly Expenses for Family of 5

31:55

Cristina asks Quick Question 4: “What was the hardest lesson you learned about money as a kid?”

Karina responds: “I think we can all relate to the lesson that money doesn’t grow on trees. I always thought my parents had an unlimited fund that I could tap into all the time. However, I quickly had to learn that wasn’t the case. My parents had to work very hard to earn everything they owned. The hardest lesson I learned about money was that you actually have to watch what you spend and save money over time because it’ll always benefit you in the end.”

32:35

Cristina asks Quick Question 5: “Karina, what was the first thing you bought with your money?”

Karina responds: “The first thing I ever bought with my money was a toy cash register. I was so obsessed with counting money and being a cashier. It was a complete full circle moment for me when I was hired to be a teller at age 19. I just know that six or seven-year-old Karina would’ve been so proud of me.”

40:19

Interested in starting a savings account for your child? In this episode we talked about the Origins Savings account which is available for all children from the age of 0 to 12. With no minimum balance requirements and monthly charges, this account will teach your child healthy saving habits at an early age. We also mentioned the Fun Bucks program which is a great way for children to earn extra money as they learn the importance of saving over time.