Talking & values

How money skills develop, from preschool to the teen years

Money skills build in layers: self-control and counting first, then habits, then knowledge and bigger decisions.

By KidsLearnCash · Published · 3-minute read · 5 sources

In short: practice waiting and counting with preschoolers, build habits with a regular allowance and goals in the primary years, and hand teens real budgets and bigger decisions.

Three building blocks

The Consumer Financial Protection Bureau’s research on youth financial capability describes three building blocks that develop at different times:1

  1. Executive function: planning, focus, memory, and self-control. It starts developing in early childhood (about ages 3 to 5) and keeps maturing into the teen years.
  2. Financial habits and norms: values, standards, and routines. These take shape mostly in middle childhood (about 6 to 12), as children watch how family members and peers handle money.
  3. Financial knowledge and decision-making: from early counting and number sense, through basic money concepts in middle childhood, to more solid knowledge in adolescence (about 13 to 21).

The CFPB presents these as general benchmarks; children vary.

Ages 3 to 5: waiting, counting, choosing

  • Count coins together and sort them by value, not size.
  • Play waiting games: “In five minutes we can have the snack. What can we do while we wait?” Children who distract themselves wait longer.2
  • Offer small choices between two things, and talk about why.

Ages 6 to 12: habits and goals

This is when habits take shape, so routines matter most.

  • Start a regular allowance and a first savings goal.
  • Compare prices and talk about needs and wants.
  • Start talking about ads. Children 7 and under have limited ability to understand an ad’s persuasive intent; from about 7 to 11 they can begin to recognize it with a parent’s help.3

Ages 13 and up: budgets and bigger decisions

  • Hand over a budget for a category, such as clothes or outings, and let them manage it month to month.
  • Talk about digital money, earning from a job, and what borrowing really costs.
  • Involve them in a real family decision, like planning a trip budget.

Does teaching it actually help?

A review of 76 randomized studies found that financial education improves financial knowledge and behavior on average, with effects comparable to education in other areas.4 An earlier review found effects that fade over time and argued for teaching close to real decisions.5 For families, both point to the same habit: small, regular lessons tied to the money your child is actually handling.

What the research says

  • Executive function starts developing around ages 3 to 5, money habits and norms take shape mostly from about 6 to 12, and financial knowledge and decision-making solidify in adolescence.1
  • Children 7 and under have limited ability to understand advertising’s persuasive intent; from about 7 to 11 they can begin to recognize it with help.3
  • Across 76 randomized studies, financial education improved financial knowledge and behavior on average.4
  • Effects of financial education can fade, which favors teaching close to real decisions.5

Try it in KidsLearnCash: each child’s Learn tab has short money lessons, and Kid Mode lets younger children see their own money without seeing a sibling’s.

See how it works · Open KidsLearnCash

Sources

  1. Consumer Financial Protection Bureau. (2016). Building blocks to help youth achieve financial capability: A new model and recommendations. consumerfinance.gov/consumer-tools/educator-tools/youth-financial-education/learn/
  2. Mischel, W., Shoda, Y., & Rodriguez, M. L. (1989). Delay of gratification in children. Science, 244(4907), 933–938. doi.org/10.1126/science.2658056
  3. Radesky, J., Reid Chassiakos, Y., Ameenuddin, N., Navsaria, D., & AAP Council on Communication and Media. (2020). Digital advertising to children. Pediatrics, 146(1), e20201681. doi.org/10.1542/peds.2020-1681
  4. Kaiser, T., Lusardi, A., Menkhoff, L., & Urban, C. (2022). Financial education affects financial knowledge and downstream behaviors. Journal of Financial Economics, 145(2), 255–272. doi.org/10.1016/j.jfineco.2021.09.022
  5. Fernandes, D., Lynch, J. G., & Netemeyer, R. G. (2014). Financial literacy, financial education, and downstream financial behaviors. Management Science, 60(8), 1861–1883. doi.org/10.1287/mnsc.2013.1849

General educational ideas, not developmental or individualized advice. Ages are approximate. We summarize published research in plain language; read the sources for their methods and limits. No affiliation or endorsement is implied.