We never expected birthday money to lead to tears.

When my brother was four, he was given some cash for his birthday. And he knew just what he wanted to spend it on: this wooden train bridge he’d been eyeing in the local toy store.

But when my brother handed the money over, and clerk handed him the toy, he burst into tears! After some comforting, my dad discovered that my brother didn’t realize he wouldn’t get to keep the money too. He learned an important financial lesson that day: You can only spend your money once. 

Experts say your kids’ money habits may be set by age five. A University of Michigan study found that kids as young as five have emotional reactions to spending and saving, and those emotions will form the basis of their future money habits. 

It’s never too early to start teaching good financial habits, according to the researchers.

Here’s some tips for age-appropriate skills to teach:

Age 3-5

Have your child set a small savings goal for a toy they want. You could also consider a matching program where for every dollar they save for a week or more, the parents double it so they have greater spending power. Researchers at Stanford found that kids who learned delayed gratification at a young age had better SAT scores and grades in college. 

Age 6-10

Start to explain to them how budgeting works. Tell them about all the different expenses your money has to go towards before you can spend on fun things. Maybe give them a certain amount of money they can spend on snacks at the store so they learn how to make choices within a budget. With their own money, encourage them to start three “buckets”: spending, saving and charitable giving. 

Age 11-13

If your child doesn’t have a savings account already, take them to your local bank or credit union to sign up. At this age, they can see the gratification of saving up for larger items. Also explain to them how interest works for savings accounts, and show them the interest they earn on their statements. 

Age 14-18

This is the perfect age to sign up for a checking account and get their first (parent-supervised!) debit card. 


Nationally, more than 457,000 kids have savings accounts. If your child doesn’t have one yet, now is the perfect time! Your child could have a chance to win $100! Visit your local branch today to get set up.