How to raise kids who know how to save and manage money

Do you remember the first time you got interested in money? Perhaps it was when you had an allowance and saved up for something special. Or maybe a summer job taught you about how much you could earn in a week.

However and whenever it happened, we all have lessons, habits, and values related to money that we started young and built on over time. If you have children, you might be thinking about how you can help them develop their own positive habits and concrete values in their finances. And when you start helping kids learn matters, more than you might think: Young people with high financial literacy are more 72% likely than those with fewer skills to save money.

“Teaching children about financial concepts from a young age helps them develop healthy attitudes toward money, responsibility, and planning for the future,” says Heather Winston, director of product strategy for Principal^®. “The key is to make these lessons engaging, relatable, and age appropriate.”

In between balancing homework help, sports schedules, your own work, and real life, how can you add “money tutor for my kids” to your resume? Here are some ideas to get started.

Every skill you help your kids learn is a building block on previous tasks—putting a shoe on, then learning how to tie laces, for example. Financial IQ is no different.

For example, the first money lessons might resonate when your child is about pre-kindergarten age. They might start observing that you pay for things, and you might talk about how not everything costs the same. School-age children probably can have small savings goals, or plan how to spend money they got as a gift. Pre-teens and teens build on those lessons, figuring out how to allocate funds from a summer job, or save for a long-term goal. And it will also depend on your child: How can you make finance lessons appeal to them and their interests?

Help to get you started: There are guidelines you can use to get started on these conversations; the Consumer Financial Protection Bureau has some well-rounded basics and FDIC has a Money Smart for Young People curriculum to help.

Part of those age-appropriate lessons include moving money from the abstract—a credit or debit card, for example—to the concrete—real dollars and cents. There are a number of ways to do that, from providing an allowance that perhaps increases as children get older, to splitting monetary gifts into save and spend categories.

“One of the best approaches involves using real-life situations as teaching moments,” Winston says. “This will make financial concepts more tangible and relevant, no matter how old your child may be.”

Help to get you started: It may seem old-fashioned, but a trip to the bank to set up a savings account for your child can help turn money from apps and credit and debit cards (which children are probably familiar with) to real balances they can affect and grow.

As your kids learn alongside you about money, there are ways to take the foundations of your financial knowledge and help them apply it to their own lives. One good piece to start with: a budget. Your child’s first budget (say they’re saving for a super-special toy) doesn’t have to be complex. It can simply include the basics (an expense) and income (or savings) as well as how much they have left to put aside. What they’ll learn carries forward even as their budgets get more complex, and less under your control.

Help to get you started: Adapt your budgeting lessons to your child’s age. Very young children may be able to outline their savings goals on a piece of paper, taped to the fridge to keep it top of mind. Older children may transition to an online budgeting tool to help manage their funds.

Money is a tool to help you achieve your goals, from helping a child pay for an education to taking a family vacation. How you achieve those goals is a reflection of your values, and those financial values are something you can talk about with your kids.

Along the way, you’ll share reasons why you saved like you did or spent on something, and discussing those decisions helps boost your kids’ financial literacy. In fact, parents who have those talks at least once a month have kids who are more financially literate. “You are modeling healthy financial decisions for your family all the time,” Winston says. “Because children learn by observing, when they understand that you are shopping for sales or prioritizing differently for a reason, they will usually follow suit.”

Your financial values are also a good way to weave in financial tradeoffs; saving for one thing might mean going without something else. And whether or not you realize it, your kids are plugged in to your family’s financial footing: Over half of teens are either concerned or scared about how money is impacting their lives, and 50% are stressed about their family or caregiver’s ability to pay bills. Talking to them may help alleviate worries about your family’s situation, and help them realize it’s OK to share future questions, too.

Help to get you started: Involve your kids, especially as they’re older, in how you make different types of financial decisions. For example, when you’re out of groceries, it’s a short-term choice that’s also a need; you have to make meals and ensure your family is fed. When you’re choosing if you can afford a vacation, and where to go, that’s a longer-term evaluation that’s a want and may mean saving over time.

Six out of ten 15-year-olds have a bank account, and nearly all of them have bought something online. Translation? Kids, especially older ones, are familiar with financial products and services. As it aligns with your goals and your children’s financial literacy and needs, financial tools can help reinforce healthy financial habits.

Help to get you started: If your child has a part-time or summer job, they can set up an auto-transfer to a savings account to help them build what they need for a long-term goal.

The adage, It’s not timing the market, it’s time in the market, is especially relevant for teens and retirement savings. They have decades and decades before they need the funds, so any money stashed away can plug into the power of compound interest. “Teaching your child about retirement savings at a young age sets them up with good financial habits and helps them understand the value of saving for the future,” Winston says.

Help to get you started: Your teen can get a custodial Roth IRA, which typically has no minimum balance; your child must simply have earned income and funds to contribute. (One idea to encourage saving: Match whatever dollars they put aside.)

Eight out of ten high schoolers say knowing more about money management would be a positive in their lives. If your kids learn about personal finance in school, discuss the curriculum and their thoughts. If not, try to fill the gaps, either with what you know or with lessons from others. It’s a good way to model that there’s always something you can add to your financial foundation.

Help to get you started: If you have a financial professional, you could also ask an older child if they want to sit in on planning sessions.