Teaching kids about money: Ages 7 to 12 is for saving, not spending

Ages 7 to 12: Saving, not spending

Now’s the time to toss the piggy bank and open a bank account instead


teaching kids about moneyDuring the ages 7 to 12, the money questions become more plentiful—and more challenging. And just as you want them to learn household skills like chopping veggies and eating healthily, you also want them to understand basic concepts about saving and spending money. “I’ll go to the store with my young daughter Abby and do a lot of what I call, ‘browsing without buying,’” says personal finance writer Bruce Sellery. “We’ll go to the store just to look much of the time but I’m clear with her that we’re not buying, we’re browsing. That’s important.”

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It’s also an ideal time to take them to the bank and open up an account for them to replace their piggy banks. In a survey of more than 200 MoneySense readers, fully 92% had opened up a bank account for their child by the age of 12. You can either deposit their piggy bank savings into it or simply open one with a few of your own dollars to get them started. “Teach them they can spend all that money on new shoes or music downloads now, or you can save something for university, or you can do both,” says author Kira Vermond. At age 9 or 10, they’ll likely to be open to the concept of budgeting to manage their money. Show them the monthly household budget. (Mine is in a written journal while my husband keeps his in an excel spreadsheet. We keep both handy and available.) They’ll see right away that certain bills re-occur on a monthly basis (cable, wireless, etc.) while others are one-time expenses.

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Budgeting discussions also lead to cost-cutting tips. This is when learning about sales, discounts and getting more for your money comes in. You can also touch on the value of shopping online to find better deals. “But every once in a while, surprise them and give them something more,” says Vermond. “It’s really nice, if you say ‘no’ all the time, to then say ‘yes.’” Why is that important? Because in life we get bonuses, salary increases and commissions, so it teaches kids to manage those surprise amounts as well. You’ll find children have a lot of questions at this stage: What should I be doing with my money? (Saving a bit, spending some.) What does an ATM do? (It gives mom and dad access to the money they earn from their jobs.) The key is to be open and honest and to avoid keeping secrets about the tough stuff. Ron Lieber, author of The Opposite of Spoiled, says that whenever kids pose a money question, parents should respond by asking the reason for the question. “Kids are often dealing with big complex questions,” says Lieber. “For instance, one of my kids asked why we have no summer house. She’s trying to figure out if we can’t afford one or simply don’t want one. Getting clarity helps kids feel safe.”

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The key is to keep talking and managing expectations. “Ask them what they think they’d like to do for a summer job when they get older?” says Sellery. “Ask them what they think they’d like to be. A vet? How would they pay for that?” Financial educator Ruth Hayden, a mother of four adult kids agrees, and adds that her family had weekly Sunday night meetings about money while the kids were growing up. That was where the family discussed how to spend some of its household income as a family unit. “Should we take an expensive family trip to California this year or should we skip the trip now and buy a camper next year instead? Kids love to be in on the big stuff,” says Hayden. “It empowers them in so many ways.”

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Here are smart money moves you can show your kid now:

Open a savings account*
Explain the importance of saving up for items that cost more. But don’t worry about a debit card* just yet—that can wait until high school.

Start a donation jar
Encourage kids to set part of their allowance aside for charity. Sponsor a child through a charitable organization like Plan Canada so they can see how their money provides essentials like clean drinking water, school supplies and health care.

Create your own currency
You can make 
coupons that can be traded for extra video game or screen time when they perform extra chores.

Give them a raise
Their allowance should be given to them weekly and go up annually. Ask them what they’ll do with the extra money.

Stop packing school lunches
Let them make their own. Keep a grocery list where kids can request items they’d like for school lunches.

Talk about jobs, goals, passions
Explain what you do for work and why you chose that. Ask them what they’re interested in doing and what kind of education or training it might require.

Share the bills
Show them some of the household bills—utilities, cable and Internet—and let them help you add up the monthly budget.

Let your kids sift through your wallet
Sit down and take the credit cards and bank cards out. Explain what they are, how they work and where the money comes from.

Pick apart an ad
Instead of fast-forwarding through commercials, stop and talk about how the advertisers make the products extra enticing.

Explain value
Compare a pair of cheaply made shoes with a well-made pair. Talk about the difference in materials and craftsmanship.

More tips on how to raise money-wise kids: 

Ages 0 to 6: My first money moves »

Ages 13 to 17: Big kids, bigger budget »

Ages 18+: Preparing to launch »

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