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Money Basics For Kids And Teens: A Guide To Smart Spending And Saving

10/29/2024

By: Industrial Federal Credit Union

Money Basics for Kids and Teens: A Guide to Smart Spending and Saving

Teaching kids and teens about money is a fundamental part of preparing them for the future. At Industrial Federal Credit Union, we believe that learning the basics of money can empower young people to make wise financial choices. Whether you're saving for the latest video game, a new phone, or those limited-edition sneakers, understanding how money works and why it matters will help you reach your goals. Share this article with them to help them understand the basics of money.

In this article, we’ll go over the basics of money—where it comes from, different ways people use it, and how you can manage it wisely. By the end, you'll have a solid foundation to start building your financial skills!


What Is Money?

Before money existed, people relied on bartering, which meant trading one item for another. For instance, someone might trade a basket of apples for a pair of shoes. While bartering worked, it could be tricky to match values and find someone who wanted what you had to trade. That's why money was invented—giving everything a standard value made it much easier to buy and sell goods.

Today, money comes in many forms, including coins, paper bills, and digital money (like the funds in your bank account). The value of money doesn’t come from the material it’s made of; it comes from the fact that we all agree on what it's worth. This understanding allows us to buy things like a $10 movie ticket or even save up for a vacation.

While it’s easy to spend money on things you want, saving is just as important. Saving money lets you reach bigger goals in the future, like a car, college, or an emergency fund. Even small amounts can add up over time if you save consistently.

Different Types of Money

The United States Mint produces all our coins and paper money, and each type has a specific value. Here’s a quick breakdown of coins and bills:

  • Coins: Pennies (1 cent), nickels (5 cents), dimes (10 cents), and quarters (25 cents) are the most common. There are also 50-cent coins and $1 coins, although these are used less frequently.
  • Paper Bills: Bills come in $1, $5, $10, $20, $50, and $100 values. These bills make it easy to pay for everything from small purchases to larger expenses.

Coins are helpful for exact purchases, like a snack or a drink, and are great to save up over time. If you’re collecting coins, you can bring them to the credit union to exchange them for larger bills or deposit them into a savings account.

Ways to Pay: From Cash to Digital Payments

Money can be spent in several ways, whether you’re in a store, online, or sending money to a friend. Here are some common methods you’ll come across:

  1. Cash: Coins and bills are the simplest ways to pay for things in person.
  2. Checks: Paper checks let you pay directly from your bank account, typically used for larger or special payments.
  3. Debit Cards: Connected to your bank account, a debit card deducts money directly when you make a purchase.
  4. Credit Cards: A credit card allows you to borrow money for purchases, which you pay back later.
  5. Prepaid Cards: These cards have a set amount of money loaded onto them.
  6. Gift Cards: These are similar to prepaid cards but are typically for specific stores or restaurants.
  7. Contactless and Digital Payments: Apps and phones let you pay without touching a payment reader or pulling out cash.
  8. Bank Transfers: You can send money between bank accounts, often to pay bills or send money to friends or family.
  9. Peer-to-Peer Payment Apps: Apps like Venmo and PayPal allow you to send and receive money easily.
  10. Cryptocurrency: Digital money not controlled by banks, used mainly online.

Understanding these payment options will help you choose the best method for different situations. Digital payments are convenient, but cash and debit are great options for budgeting since you’re limited to the funds you already have.

Where Does Money Come From?

The adults in your life likely work jobs where they earn a wage or salary. People like teachers, nurses, retail workers, and even YouTubers earn money for their work. Wages are hourly earnings, while salaries are regular payments regardless of hours worked.

Even if you’re not old enough for a job, there are ways to earn money! Babysitting, lawn-mowing, dog-walking, and shoveling snow are all great options for young people. You might even receive an allowance for helping out with chores, which is a great way to learn about managing money.

If you’re interested in earning extra, you could try selling things like handmade crafts, lemonade on a hot day, or items you no longer need (with a parent’s permission). And don’t forget—birthdays and holidays are also times when you may receive gift money or gift cards, which you can put toward your savings or something special.

Saving Money: Why It Matters

Saving helps you set aside money for the future, whether it’s for a big goal or an unexpected expense. Here are a few easy ways to get started with saving:

  • Start Small: You don’t have to save huge amounts at once. Even small amounts can build up over time.
  • Use a Piggy Bank: For younger kids, a piggy bank is a fun way to save coins and small bills.
  • Open a Savings Account: When you’re ready, opening a savings account with Industrial Federal Credit Union is a great next step. This account can earn interest, which means the credit union adds a little extra to your savings each month!
  • Set Goals: Think about what you’d like to save for, whether it’s a new game, college, or something else. Setting a goal can keep you motivated to save.

Spending Wisely: Setting a Budget

Once you start earning money, it's helpful to set a budget. A budget is a plan for how you’ll spend and save your money. Here’s how to set one up:

  1. List Your Income: Write down how much money you’re getting (like from allowance or jobs).
  2. Set Saving Goals: Decide how much you want to save from your earnings.
  3. Plan for Expenses: Write down the things you want or need to spend money on.
  4. Stick to Your Plan: Try to follow your budget each month. If you need help, ask a parent or a staff member at Industrial Federal Credit Union for guidance.

Budgeting might sound complicated, but it’s just a tool to help you reach your goals. The more you practice, the easier it gets.

Get Started with Industrial Federal Credit Union

Now that you know the basics of money, you’re ready to start making smart financial decisions! Industrial Federal Credit Union is here to support you on your journey. If you’re interested in opening your first savings account or want to learn more about managing money, our team is here to help. Plus, we offer tools and resources for young members, so you can build strong financial habits now and for the future.

Remember, managing money is a lifelong skill. Starting early can set you up for success and help you reach your biggest goals, from buying your first car to saving for college and beyond. Don’t hesitate to reach out to us or explore our financial education resources to continue learning!


Industrial Federal Credit Union is committed to "Powering Your Financial Future" and helping every young saver make smart choices. We’re excited to be part of your financial journey—today and every step along the way!