Teaching your kids about money

Six thousand euro invested at 19, left completely alone at 8% a year, becomes about €41,000 by 45 and roughly €207,000 by 65. The child contributes nothing after that first payment. The money does the rest, which is exactly why the lesson has to start long before the money shows up.

Pocket money is the cheapest teaching tool you have

Start with the numbers on the table. A thirteen-year-old gets €20 a month, every month, for five years: a flat €1,200 that buys whatever that month's mood suggests. The same thirteen-year-old saving €8 of it a month has €480 at eighteen, plus a working memory of choosing to wait for something. One of those two eighteen-year-olds has a down payment for a first flat share.

A 13-year-old getting €20 a month will spend it. That is not a character flaw, it is what an untrained decision looks like. The training is a split they decide themselves: €8 to spend, €8 to save, €4 to give. Thirty minutes of work, once, when the jars get labelled together.

The saving jar is where the interesting part happens, because it produces the only lesson that sticks: waiting for something better. A €96 bike helmet after twelve months of saving €8. A game they wanted in March and no longer want in June, which is the more valuable lesson of the two.

What to teach at which age

Children can handle more than most parents assume, provided the concept matches the stage rather than the school year.

3 to 5: needs, wants, and paying

Two categories are enough. At the till, ask which one this is: apples or the plastic toy. Let them hand over the cash when you buy something small, because a card teaches nothing about a price. There is no budget lesson here, only the idea that things get paid for.

6 to 10: work, saving, and waiting

Introduce the link between effort and money, outside the basic chores that come with being part of the household. Weeding the garden, washing the car, sorting the recycling for a small amount. Then the jar arithmetic: €8 a week for twelve weeks is a helmet, and the helmet is theirs because they chose the weeks.

11 to 14: a budget that is actually theirs

Give them a monthly amount covering things you were paying for anyway: school supplies, phone credit, cinema, clothes beyond the basics. Let them run out in week two. The month they run out in week four, without being rescued in week two, is the month budgeting stops being a word adults use.

15 to 18: the first payslip, the first statement

Explain a payslip properly, including what the state takes and why the pension line exists. Show a bank statement with the subscriptions they forgot about. This is the point where a small regular investment into their own account does more for them than another conversation.

Where the money goes

For an under-18 in Germany there are three realistic homes for a small monthly amount, and they behave quite differently.

That last row is worth sitting with. In Germany, money in the child's own name legally belongs to the child at 18, and the tax office treats income from it as theirs, which is generous because of the basic allowance. A €100 monthly savings plan at 8% for eighteen years reaches about €48,000. Handed over at 18, it can become a car, a deposit, or a very long holiday. That risk is real, and it is the argument for having the conversation about money for eighteen years rather than hoping the account alone does the teaching.