Feeding the piggy bank – How can children and teenagers develop financial literacy early on?

Bastian Kunkel: Parents can start teaching their children simple financial concepts as early as toddler age—for example, that money is limited and used for specific purposes. Play money, setting up a piggy bank, and involving children in simple financial decisions, such as grocery shopping, are great first steps. This way, children learn early on that money is a resource that should be used wisely.

At what age should parents start teaching financial literacy?

Bastian Kunkel: Even preschool-aged children can understand concepts like saving and reward systems. The goal at this stage is to convey the value of money through small tasks or pocket money. Later, in elementary school, parents can start introducing larger concepts like budgeting and prioritizing expenses.

How can parents integrate financial lessons into daily life?

Bastian Kunkel: Everyday life offers countless opportunities. While shopping, children can help compare prices or decide what is necessary and what is not. During a family vacation, parents can involve their children in the planning process to show how to save for bigger goals. Apps that visualize money management can also help create financial awareness.

How should parents structure pocket money?

Bastian Kunkel: The amount and frequency of pocket money should be adjusted to a child’s age and level of independence. For younger children, a weekly pocket money allowance makes sense, as it helps them learn short-term money management. For older children and teenagers, a monthly allowance can be beneficial to encourage long-term planning. It’s important that parents establish clear rules about how much money is freely available and how much should be saved or set aside for special purchases.

Should children and teenagers work with a financial plan?

Bastian Kunkel: Yes, it can be helpful. For example, a child could decide to allocate part of their pocket money for immediate spending, part for saving goals, and part for charitable donations. This method fosters awareness of different types of money management and teaches values like responsibility and generosity.

How can parents explain financial concepts in a child-friendly way?

Bastian Kunkel: A savings account could be compared to a “money parking lot,” where money is stored safely and grows over time. The stock market could be described as a “marketplace” where companies sell shares, similar to how items are bought and sold at a flea market. Caution is advised when discussing cryptocurrencies, as they are complex and often attract fraudsters. Because of their complexity—most adults still struggle to understand blockchain and related concepts—they should only be introduced in late adolescence.

How can parents raise awareness in consumer-driven teenagers?

Bastian Kunkel: Teenagers who are highly focused on consumption and status symbols can benefit from clear boundaries and realistic conversations. Setting goals can help—for example, saving up for a new smartphone and developing a plan together. Parents should not only address the “wanting” aspect but also discuss the sustainability of consumer decisions. They can act as role models by openly sharing their own spending priorities. An app that focuses on financial education for young people is “beatvest.”

Is financial behavior inherited?

Bastian Kunkel: Financial habits are often unconsciously passed from parents to children. I’ve observed this in myself and my parents. I had to break some “bad” financial beliefs and habits to improve my own money management. Children watch how their parents handle money and often imitate their behavior. Open conversations about financial decisions within the family can be very helpful.

Should parents take out disability insurance for their children?

Bastian Kunkel: Yes, this can be a huge advantage. Too often, we have clients who are still young but can no longer obtain disability insurance due to pre-existing conditions or past accidents. Parents can take out a student disability insurance policy for their children as early as age six, which can later be converted into a full policy.

What types of insurance and investments do you have for your son?

Bastian Kunkel: We have private health and accident insurance for him. Most accidents happen during leisure time, where government accident insurance doesn’t apply. Right after birth, we took out a children’s policy for him. This locks in his health status at the time of enrollment, allowing him to obtain disability insurance later without needing to undergo another health assessment. At the same time, we are saving for his retirement with a fund-linked pension plan. We also set up a junior investment account with an online broker, where we invest in a globally diversified ETF. When he turns 18, he will have access to this account. Once he is old enough, we will explain everything to him so that he can develop financial awareness and a sense of security early on.