Suitable financial goals: Toddlers to adulthood

Will you tell your 5-year-old to start saving for college? And would you burden your pre-teen with a retirement plan? Although both behaviors are great financial habits for kids and teens to learn at an early age, those goals need to be staged carefully. One of the worst financial mistakes that a parent can make, it is to have goals in mind that don’t go with their kids’ age. I would love for my 3-year-old to have a retirement plan and that she can start saving for college, but that is an unrealistic goal for her age. The same principal applies to teens and pre-teens. Teens can start earning money, saving and even investing early in life (and here you can find tips to help towards that) but the truth is, it is hard work that needs much reinforcement early in life. Teens can save for a car or school, because they see that as a more immediate need than retirement, a home, or life insurance.

You got the point! Make sure you teach your kids to have age appropriate financial goals. Here is a small list of chronological recommendation we have gathered over the years that might serve as a guide for you and your kids to have fun with money and to use it wisely.

  • By age 4 your child should know what money is. They should understand the basic uses of money. Buying and selling items is an effective way to start teaching them. (Tip: use daily life situations to teach then about money: like going to the grocery store and let them be a part of the process.)
  • By age 5 your kid should know to make choices. Kids at this age should know that money is needed to acquire items like toys, food, snacks, etc. (Tip: teach them how to save for toys, favorite snacks and charity. These three concepts can be fun for them and they can be used as a powerful financial lesson)
  • By age 8 your kid should know the difference between needs vs wants. This one is hard, but with consistency they will understand the being content principle. (Tip: don’t think that for kids everything is a want. Be wise about the battles that you pick to fight and when you do be consistent. Let them have fun and get a few items they might enjoy)
  • By age 10 your kid should know that money takes arduous work. We wrote an article about this earlier, however, I will say it again: money takes arduous work! (Tip: teach them that money does not grow on trees. Get them engaged in fun work projects around the house and pay them a small commission for their hard work.)
  • By age 15 your kid should know to save to invest and to pay for stuff with cash. Saving to invest is a terrific way for kids to start using money as a tool. Also by age 15, when your kid is making money, they should already have a ROTH IRA where they can save for exponential growth. (Tip: help your kid set up a savings and investing account.)
  • By age 16 your kid should know about saving and working towards college. By this we don’t mean a 529 account or something to that effect, because that should be done by parents earlier in life. But most kids at this age can work, and they should be earning some money that can go towards college. (Tip: Teach them to save some money for college (and use grants and scholarships) instead of using student’s loans.)
  • By age 18 your kid should know about retirement and investing. The ROTH IRA is a fantastic way to start saving for retirement at this age if it was set up for them earlier. Saving 10% to 15% of what they make will make an enormous difference for them. (Tip: the key to investing is getting them hooked at an early age. At this stage in their life, budgeting is as important as saving because it is at this point when they start spending the most and trying to be independent financially.)
  • By age 20 your “kid” should know about multiple strings of income. At this age make this a priority, as they go to school, start thinking about the future, etc. (Tip: help them learn a trade that they can turn into cash on top of their main job.)

Finally, a few resources to help give you a few ideas to start having fun with your kids: for kids and teens visit our friends at, they have a ton of resources that can be fun and practical. Also, check out Dave Ramsey smart money kids here for more info.

There you have it, a solid financial plan with age appropriate goals, that will keep your family on track to be financially free. Don’t forget to subscribe to our blog for more articles and tips, leave us a comment and help us reach families all over the world. We don’t profit from this blog, we do this to help families escape financial slavery and poverty cycles. Help us spread the word!! Enjoy!

Download a PDF file with a parents cheat sheet, HERE.

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