How to Teach Dollars and Sense

American parents are talking to their kids about money — but kids may not be getting the message. While 63 percent of parents report talking to their young children about financial concepts like budgeting and debt, most young adults report feeling under-informed and say money conversations didn’t start until high school.

The late start puts U.S. teens behind the curve, financially speaking. The National Center for Education Statistics reports that nearly a quarter of American 15-year-olds score below proficiency on a financial literacy test, behind kids the same age in China, Australia and Belgium.

According to Stacey Black, lead financial educator at Boeing Employees Credit Union (BECU), when it comes to money conversations, later isn’t better. She counsels families to start talking to kids about the four “pillars” of financial health – saving, spending, borrowing and sharing — before kids are even old enough to join the conversation.

“The age to begin is birth,” says Black. “It’s never too early to start. I like to tell people to think about ways to weave this into everyday conversations and activities starting as early as possible.” These early conversations are as important for parents as they are for kids. Consider them practice sessions that pave the way for richer, more meaningful money talks later on.

Ready to get started? Here’s how to foster financial literacy, from toddlerhood through the teen years.

EARLY YEARS 0-5. Of course, pre-verbal tots can’t converse about saving, investing or charitable giving. But talking about these concepts openly creates an important family norm and sends the message that talking about money is not only OK but encouraged, notes Black. “You can open a savings account or college fund for your baby and when they get old enough, you can start talking about why you’re saving and update them on savings progress.”

By age 5, kids are often ready to set a savings target or contribute to a family savings goal. “When kids have a toy that they want, or if there’s a family vacation coming up, you can make that a savings goal,” says Black. Allowing kids to handle, sort and stash coins and bills into a “piggy bank” or jar can help kids begin to understand the value of money.

Before kids reach kindergarten, parents can talk to them about their own charitable giving and explain how giving to a cause is different from sharing toys with a sibling or friend.

ELEMENTARY YEARS 6-12. School-age kids have watched adults around them earn, spend and save for years, so they’re ready to tackle bigger topics. Families might be surprised by the financial savvy of a fourth-grader, says Black. “You can definitely start talking to a fourth-grader about concepts like borrowing, debt and interest. It’s not going to be the same conversation you’d have with a teenager, but you can introduce them in a simple way.”

Aim to spark conversation and reflection about financial choices and the long-term implications of purchases. Build a habit of thinking before spending by establishing a waiting period of 24 hours before making a purchase over a certain amount and talking to kids about the difference between shopping — or evaluating and comparing potential options — and buying.

To internalize these lessons, kids need to have some money to spend, says Black. “Whether or not parents believe in giving out allowance, it’s important that kids have money to make mistakes and learn,” she notes. If families don’t want to dole out allowance or pay kids for chores, they can allow kids to buy some of their own school supplies, help shop for family holiday gifts or choose souvenirs from the gift shop on vacation.

As kids grow, the conversations around saving for the future can grow, too. “Some families introduce investing around this age,” says Black. “I’ve even seen families have a family 401K and make decisions about how to invest together, so it becomes a family activity in addition to a learning tool.”

TEENS AND YOUNG ADULTS 13+. For teens, the borrowing conversation takes on added importance. Managing debt is a strong theme in The Next Big Talk, BECU’s guide to meaningful money conversations with kids. “For me, credit is the most important topic for teens,” says Black. When teens begin eyeing bigger purchases, from gaming systems to cars, highlight the cost of using credit with online calculators to show how long, and how much, they’ll spend on interest and fees.

The key to keeping teens engaged in money talks is staying out of lecture mode. Instead, make financial literacy topical and fun — think TikTok meets a teachable moment.

Financial lessons are everywhere, from streaming channels to family game night. Playing the classic board game LIFE can get teens thinking, and talking, about financial choices.

Giving teens more control over their spending for clothes, gifts and entertainment provides more opportunities to practice budgeting, prioritizing and making mistakes while stakes are relatively low. Many banks allow parents to open a youth spending account linked to a debit card for kids 13 and up, allowing teens more freedom while parents can transfer funds and keep an eye on spending.

Don’t worry if you’re still learning about financial literacy yourself, notes Black. “I tell parents that it’s OK not to know everything. Don’t think you need to be a money expert to talk to your kids about this, because that’s what holds a lot of parents back.”

Financial literacy involves lifelong learning and showing teens how to find information is one of the most valuable lessons parents can provide, says Black. “It’s OK to say, ‘I don’t know, let’s look it up!’”

Malia Jacobson is a journalist specializing in health, family, and business topics.