Teaching Kids About Money: Goals by Age

You're probably no stranger to setting goals. You may have had the goal of graduating from college or buying a home. Maybe you've achieved your goals; maybe you're still working on them.

You may not have thought about teaching money matters to your kids in terms of goals, but it helps to do so. Setting goals helps you measure your (and your child's) progress.

Set goals that you want to see your child achieve. The goals you now decide on depend in part on the age of your child and what she already knows. You can always adjust your personal goals as you go along.

Experts differ on what they believe to be minimum achievements for a particular age. One expert suggested that a child's money education should start as soon as he's old enough not to eat the money. Another expert favored savings plans for preschoolers.

You, of course, can set any goals you want. Here are some you might consider as minimum achievements for a child's age. When your child completes an age category, test his money knowledge to make sure that he has mastered the goals you've set.

• Ask him questions. See whether his answers show that he has achieved the different goals.
• Watch her in action. Doing is even more powerful than saying. Put her to the test to see if she succeeds.

Goals for Kids Age 6 to 10

Kids starting elementary school are outgrowing the myths of early childhood—the tooth fairy, the Easter bunny, and even Santa Claus. It's time to start learning the realities of money.

If your kid falls in this age category (essentially elementary school age), you want to be sure that she masters certain basic money concepts:

• Identifying money. Make sure that she knows the difference between a nickel and quarter.
• Making change. Make sure that she knows how to present enough money to cover a purchase and to count her change.
• Being responsible for money. If she loses the dollar that was in her pocket, she has to know that it's her loss (you won't replace it). This will teach her to be more careful in carrying money.
• Understanding that things cost money. From the candy she eyes at the supermarket checkout counter to the premium movie channels on TV, she must know that nothing comes free.
• Handling an allowance. Make sure that she learns to live with the allowance she's given and to meet any expectations for it that you might set. For example, this may include a modest savings plan to pay for things she wants.

Goals for Kids Age 11 to 13

As your child gets older (essentially middle school age), his responsibilities when it comes to money should increase. Your expectations of his money skills should also increase at this point.

Here are some things you might expect of your child at this age:

• Setting up a savings plan. As your child ages, he's better able to set goals that are more far-reaching. For example, he might want to save for a summer experience—a day at Great Adventure or Six Flags.
• Setting up a savings account. The old piggy bank may have been okay in elementary school, but once his savings grows, it's time to bank it in a commercial institution.
• Giving to charity. Even if it's only a little money, it's about time to learn about giving to worthy causes.
• Shopping wisely. Children this age may spend time at the mall on their own; they need to know about shopping for value.

Goals for Youths Age 14 to 18

By this age (essentially high school age), your child already has one foot out the door. You want her to have a firm grasp of certain money essentials because it may be only a matter of a few years—or even months—before she's away from your watchful eye.

Here are some things that should be mastered by a youth in this age group:

• Saving for college. College is an investment worth making—and for this age group, it's just around the corner.
• Getting a job. Nothing teaches about the value of a dollar as fast as working for it.
• Learning about investments. Your child may not yet have the bucks to buy a Treasury bill or 100 shares of Microsoft, but it's important that she understand at this age how these investments differ and what investing in general can do for her.
• Understanding what a budget is all about. Money isn't infinite (unless you've been supplying it without restriction), so she should know how to make a budget and allocate the money she has to spend among the things she needs.
• Learning about credit cards and other debt. Whether your child is ready for her own credit card is not the criterion for teaching about debt and how to handle it. It's never too early to learn the perils of having too much debt and how that can happen.
• Understanding about the different kinds of taxes. If your child already had a job, she knows that Social Security and Medicare taxes are withheld from her paycheck. When shopping in most states, she has paid sales taxes on things she has bought. And if she earns enough or has investments, she'll pay income taxes as well.

Excerpted from The Complete Idiot's Guide to Money-Smart Kids © 1999 by Barbara Weltman. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.

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