When Is the Best Time to Start Teaching Your Kids About Money and Investing
When Is the Best Time to Start Teaching Your Kids About Money and Investing?
The Sooner, the Better
If you’ve ever wondered, “When should I start teaching my kids about money and investing?” the answer is simple: as soon as they can count and understand basic concepts.
Financial literacy isn’t something that happens overnight — it’s a gradual learning process that begins in early childhood and builds throughout life. The earlier you start, the more time your children have to develop strong money habits that will serve them well into adulthood.
In today’s world, where credit cards can be swiped in seconds and investing can be done with a few taps on a phone, teaching kids about money is more important than ever.
And yes — you can start earlier than you think.
Why Early Financial Education Matters
By the time children turn 18, they’ll be faced with major financial decisions: choosing a university, managing student loans, buying a car, or even investing their first paycheck.
Without the skills to budget, save, and invest, they may struggle with debt, poor spending habits, or missed opportunities to grow wealth.
According to a Cambridge University study, children form many of their money habits by the age of seven. That means waiting until high school to teach about money is already too late.
The Ideal Age to Start Teaching Kids About Money
Ages 3–5: Introducing Basic Money Concepts
At this stage, your child can:
- Recognise coins and notes.
- Understand that money is exchanged for goods and services.
- Begin to grasp the difference between needs and wants.
Practical Ideas:
- Use play money and a toy cash register.
- Let them “pay” at the checkout with your supervision.
- Start a simple savings jar.
Teaching preschoolers about money is crutial and providing money lessons for toddlers is important.
Ages 6–9: Building Money Management Habits
By this age, kids can:
- Count money and give change.
- Understand the value of saving for short-term goals.
- Follow simple budgets.
Practical Ideas:
- Introduce pocket money or allowance.
- Use the “spend, save, give” jar system.
- Compare prices when shopping together.
Nextgen Money wil help you how to teach kids to save money and show you some allowance tips for children.
Ages 10–12: Introducing the Concept of Investing
Children in upper primary and high school are ready to learn about:
- Interest (both earning it and paying it).
- How banks work.
- The basics of investing in stocks and bonds.
Practical Ideas:
- Use a compound interest calculator to show how money grows.
- Introduce a beginner-friendly investment app with parental guidance.
- Discuss real-world examples, like how a company grows.
Nextgen Money can help you teach kids about investing, including how to explain compound interest to kids.
Ages 13–15: Preparing for Real-World Money Management
Teenagers can understand:
- Budgeting for expenses.
- Credit and debt.
- Risk and reward in investing.
Practical Ideas:
- Have them track their income and expenses in a spreadsheet.
- Introduce a simulated stock market game.
- Explain the pros and cons of credit cards.
Financial literacy for teenagers is essential. Nextgen Money will help you how to teach teens about investing.
Ages 16–18: Financial Independence Readiness
Older teens are on the cusp of adulthood and should learn:
- How to manage a bank account independently.
- How to start investing in index funds or ETFs.
- How to plan for long-term financial goals like buying a home.
Practical Ideas:
- Help them open their first real investment account.
- Teach them to evaluate financial products.
- Discuss retirement savings, even if it feels far away.
Learn the importance of teaching high school students about money, including investing for beginners.
Why You Shouldn’t Wait Until They’re Older
Many parents delay teaching about money, thinking their kids will “figure it out later.”
But without early guidance, children may develop harmful habits — like spending impulsively, avoiding saving, or fearing investing altogether.
The earlier kids are exposed to positive money habits, the more likely they are to:
- Build an emergency savings fund.
- Avoid high-interest debt.
- Start investing at a young age and take advantage of compound growth.
Example: If a child starts investing $50 a month at age 15 with a 7% annual return, they could have over $117,000 by age 45. Starting at 25? They’d have just over $59,000. The difference is huge.
Making Money Lessons Age-Appropriate
Keep It Simple for Younger Kids
Focus on tangible examples — coins, piggy banks, and counting games.
Avoid overwhelming them with complex financial jargon.
Use Real-Life Examples for Older Kids
Involve teenagers in family budgeting, explain loan repayments, or show them your investment statements.
Make It Interactive
Games, apps, and challenges make learning fun. For example:
- Have a “no-spend week” challenge.
- Compete to see who can save the most in a month.
Teaching Kids About Investing Step by Step
Step 1: Explain the Concept of Ownership
Start with shares — explain that owning a stock means owning a small piece of a company.
Step 2: Show How Money Grows
Demonstrate with a chart how an investment grows over time due to compound interest.
Step 3: Teach About Risk and Reward
Explain that investments can go up and down, but long-term strategies often lead to growth.
Step 4: Introduce Diversification
Show how spreading investments across different companies or sectors can reduce risk.
Step 5: Practice with Simulations
Use stock market games or apps to let them make “mock” investments.
It's essential you learn how to teach kids to invest in stocks.
Overcoming Common Challenges
“They’re Not Interested”
Make it fun and relevant — relate lessons to things they care about, like saving for a video game or investing in a company they know.
“I’m Not Good with Money Myself”
Learn together. Many resources — books, online courses, and podcasts — are designed for beginners.
“They’re Too Young”
Even toddlers can learn the basics of earning and spending through games and roleplay.
The Role of Parents as Money Mentors
Your kids will watch how you handle money long before you formally teach them.
If they see you budgeting, saving, and investing regularly, they’re more likely to adopt those habits themselves.
Tips for being a great money mentor:
- Be open about your financial decisions.
- Admit your mistakes and share the lessons learned.
- Celebrate financial milestones together.
Why Consistency Matters
It’s not enough to have one conversation about money — financial education should be ongoing.
Reinforce lessons regularly and increase complexity as your child grows.
For example:
- At age 6: “Let’s save up for that toy.”
- At age 12: “Here’s how the bank pays you interest.”
- At age 16: “Let’s invest in a company and track its performance.”
Long-Term Benefits of Starting Early
Children who learn about money and investing early are more likely to:
- Be financially independent sooner.
- Make informed career and investment choices.
- Avoid debt traps and poor spending habits.
- Achieve long-term goals like home ownership and retirement security.
Start Today, No Matter Their Age
The best time to start teaching your kids about money and investing? Yesterday.
The second-best time? Today.
Even if your child is already a teenager, there’s still plenty of time to shape their financial future. The key is to start small, stay consistent, and make learning about money both practical and fun.
By introducing financial education early, you give your children one of the greatest gifts possible — the skills, confidence, and mindset to make smart financial decisions for life.
Don't Wait!
Don’t wait for the “perfect time” — it doesn’t exist.
Whether your child is five or fifteen, start talking about money today.
Open a savings account, play a money-themed game, or research an investment together. Every small step you take now will pay off for decades to come.
