Debt can be stressful. That’s why the vital ability to manage money is something most parents work hard to instill in their kids. Allowances, chores, and piggy banks are tried and tested techniques, but in the digital age, there are apps and online services at our disposal for imparting financial wisdom and encouraging good habits. That’s important as cash declines in use, especially during the pandemic. 

It might feel instinctual to shield children from the pressures of money management, but that may be a disservice. Research in the UK from Cambridge University suggests that the money habits kids will carry into adulthood may be set by the age of 7 years old. 

But where do you start? And with what? Mary Gresham, an Atlanta-based psychologist who specializes in finance and families, says it should begin as soon as children are aware of the concept of money, usually around the ages of 4 and 5. 

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Starting Young

A good financial life is one of the most important contributors to lifelong well-being, according to Gresham, which is why she says parents should consider a financial education to be as important as academic education. 

“Give an allowance and then have your children divide the money into four categories: spend, save, give away, and invest,” Gresham says.

This is a popular approach in the US, promoted by groups like Money Savvy, which even offers a physical piggybank with the same four categories.

Discussing family finances and allowing children to express their opinions on how money is spent can be beneficial, Gresham says. For money lessons to really sink in, kids must have some control and input on decisions. Family finances should be discussed openly, and kids should be allowed to choose how to spend their own money, even if that means they buy something you consider to be a waste.

“A month later, ask your child whether they’re happy they bought it,” Gresham says. “Was it a good value? Did it serve its purpose?”

This helps them to reflect and learn what is worth buying and what isn’t. 

Financial Awakening

For the past few months, my family has been using RoosterMoney. The app lets me set a regular allowance for my kids (aged 11 and 8), set a chore list to give them the opportunity to earn a little extra, create savings goals, and give to charity. 

As well as earning, they can contribute a little to family expenses for items they really want. For example, my daughter pays toward our Disney+ subscription, and my son chips in for Microsoft Game Pass.