Practical Money Lessons To Teach Your 11-13 Year Old


Practical Money Lessons To Teach Your 11-13 Year Old

Savings Primer

Practical money lessons - Save money 9 year old
As a child grows, parents strive to teach age appropriate lessons to their children. Money as You Grow, an initiative from the President’s Advisory Council on Financial Capability, provides parents with practical money lessons with associated activities that children need to learn. The financial management lessons and activities on the following pages are based on more than a year of research, and drawn from dozens of standards, curricula, and academic studies.

Let’s start with a “savings” lesson and activities.

Practical Money Lesson: Save at least 10 cents for every dollar received.

Activities to reach milestone:

  • Encourage your child to always save 10% of the money received, whether it is a gift, allowance, or money earned.
  • Ask your child set a goal to buy something they would like, and have them work toward that amount.
  • Open a savings account at a bank. There are many banks that waive fees for children. To encourage savings, go to the bank several times a year with your child to deposit savings into their account. Show them how the balance has grown on each visit.
  • Consider contributing to your child’s savings with a “matching plan.” For example, deposit 25 cents for every dollar they save.

Personal Information

Practical money lessons - personal information
Practical Money Lesson: Entering personal information, such as a bank or credit card number, on-line is very risky because someone could steal it.

Activities to reach milestone:

  • Discuss with your child the dangers of entering personal information on-line.
  • Explain that thieves can use their Social Security number or other personal information to open a new credit card or create fake documents with your name.
  • Explain that a company does not give something away for free, without a catch. A free on-line offer, such as games or cell phone ringtones, are typically scams to get people to spend money without realizing it, or provide personal information for phishing.
  • Explain to your child to never reply to an email from someone they don’t know, if the subject matter is inappropriate, and never clicks on pop-up ads.
  • Visit Federal Trade Commission Identity Theft web site with your child for tips on information security.

How Savings Can Grow

Practical money lessons - grow money
Practical Money Lesson: The sooner you save, the faster your money can grow by using compound interest.

Activities to reach milestone:

  • Define “compound interest.” This is when you earn interest on both the money you save and the interest you earn.
  • Show your child the following example: Saving $100 every year starting at age 14 would grow to about $23,000 at age 65, assuming the account earns 5% every year. However, if your child started saving at age 35 he/she would have about $7,000 at age 65.
  • Visit the calculators with your child at investor.gov to compute compound interest.
  • Discuss how much your child can save. What will your child have to give up? Is it worth it?

Credit Card

Practical money lessons - credit card
Practical Money Lesson: Using a credit card is like taking out a loan. If you don’t pay your bill in full every month, you’ll be charged interest and owe more than you originally spent.

Activities to reach milestone:

  • Discuss why you should not use a credit card to buy something that you can’t afford to pay for with cash.
  • Look at credit card offers on-line with your child, and compare the interest rates.
  • Use a Credit Card Repayment Calculator to see how long it could take to repay a $2,000 credit card debt by making the minimum monthly payments.
  • Discuss how a credit card can be useful for making purchases on-line.

What other financial tips have you taught your children?