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A Guide to Teaching Your Children How to Invest and Save at Any Age—Part 2

Impart the Value of Money to Your Preteens (Ages 9 to 12)

Mother and daughter looking at tablet

Navigating the preteen years can be a challenge for both parents and children alike. As if this period of adolescence isn’t complicated enough, marketers target preteens with products that many children wouldn’t care about under normal circumstances, such as name-brand clothing, music, and movies. Thanks to aggressive marketing campaigns and a desire to fit in, preteens often feel pressure (and pressure their parents) to make expensive purchases.

It is also around this age when many children will begin making purchases alone—at stores and online (with parental consent)—and when they have the capacity to understand pricing. These situations can be the perfect time to impart valuable financial lessons to your preteens.

Below are four simple ways you can teach your preteen children about the value of money.

1. Talk about prices

As the parent of a preteen, you likely spend time with your child in many different situations that involve paying a merchant or service provider. You can use these real-life experiences as opportunities to talk to your child about money and further their financial education.

Discuss prices when you are dining at a restaurant, shopping for groceries, or making any other purchases outside the home. It’s also easy to use the different businesses you frequent (e.g., supermarkets, restaurants, clothing stores) to show your preteen how different products and services cost in relation to one another, and how to shop for the best quality and prices available.

Moreover, introduce crucial financial concepts, such as wants vs. needs and delayed gratification. It’s important for your preteen to understand that non-essential spending should not distract from key financial goals like saving for college, a prosperous retirement, or even a family vacation that everyone is looking forward to enjoying together.

2. Introduce money-earning opportunities

Another helpful way to teach your preteen about the value of money is to allow him or her the opportunity to earn some cash of their own. Many parents accomplish this goal by introducing an allowance. Others might help their child set up opportunities that are more entrepreneurial in nature, such as running a lemonade stand or creating a product to sell to others.

There are many ways to present opportunities for your child to earn money if you use an allowance reward system. For example, you might reward your child with money in exchange for completing extra chores, caring for pets, and more. The main idea is to use an allowance or business idea to teach your child that others are willing to pay for the value they help create.

A study by Brigham Young University found that it’s helpful to get money in children’s hands early in life. The amount of money isn’t nearly as important as how the child learns to take care of those funds.[i]

3. Help your child save

In addition to giving your child a chance to earn money, it’s also important to help your preteen learn the value of saving. Just as you discuss delayed gratification when you talk about prices, you should reinforce those same concepts when it comes to the allowance your child earns.

Consider opening a youth savings account with your preteen for storing a percentage of their earnings each allowance pay period. By teaching your child to forego passing fancies, you can set them up for future success so they can afford what they truly want at a future date.

The Consumer Financial Protection Bureau (CFPB) found that giving a child an allowance wasn’t enough to build a child’s financial skills—at least not without taking some additional steps. A parent’s involvement with lessons about saving and budgeting was also important. If those key parental lessons were missing, an allowance might not be an effective way to help a child become financially capable in the future.[ii]

4. Go through monthly bills together

Another effective way to prepare your preteen for a more secure financial future is to let them see how much recurring monthly bills cost. As you pay for utilities, streaming services, internet services, insurance premiums, loan payments, tuition, and more, involve your child in the process. Moreover, discuss how those monthly payments fit into your household budget.

Exposing your preteens to the concept of monthly payments is important. It is also critical to show your child how you plan ahead and budget for these payments so that you avoid accidental late payments and protect your credit scores in the process.

Experian’s budgeting guide for children notes that no one else will be as open with your child about real-life money management situations as you will. [iii]

Next steps

Trying to teach your preteen about the value of money now can set them up for financial success later in life. Yet not everyone knows how to approach the process of teaching their child about finances. An American Psychological Association study found that 36% of Americans feel uncomfortable discussing money, and 18% feel it’s rude to discuss the topic.[iv]

If you need guidance on how to talk to your preteens about money management and investing, you can reach out for support. Contact a Santander Investment Services Financial Advisor today to start a conversation.

[i] “Teaching Children About Money: Prospective Parenting Ideas From Undergraduate Students” Journal of Financial Counseling and Planning

[ii]“Foundations of Financial Well-Being: Insights into the Role of Executive Function, Financial Socialization, and Experience-Based learning in Childhood and Youth” The Journal of Consumer Affairs

[iii]“How to Teach Your Child to Budget Money” Experian

[iv]“Money and the family: Creating good financial habits” American Psychological Association

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