Age-by-Age Money Milestones: What to Teach When (Wealth Management Edition)

By LearnWithEbba | November 2025

Most parents wait until their children are teenagers to start teaching them about money. By then, it is often too late.

After 15 years in private banking, advising high-net-worth families managing portfolios worth hundreds of millions, I have observed a pattern that most people never see: the families who successfully transfer wealth across generations start financial education at age three, not age thirteen.

Most habits, including money habits form between ages three and seven. By the time children reach adolescence, their core financial behaviours are largely established. Everything after that is course correction, not foundation building. This creates a narrow window that most families miss entirely.

I have watched what happens when this window is missed. I have seen the consequences play out across two and three generations. And I have also seen what happens when families get it right.

A young child joyfully deposits coins into a jar, learning the value of saving and financial responsibility.

The 70 Percent Problem Nobody Talks About

There is a well documented phenomenon in wealth management: 70% of wealthy families lose their fortune by the second generation. By the third generation, that number rises to 90%.

Most people assume this happens because of bad investments, economic downturns, or excessive spending. Those factors play a role, but they are not the primary cause.

The real reason is simpler and more preventable: children inherit capital without inheriting capability.

Let me share three examples from my own client relationships that illustrate exactly how this happens.

The Sudden Inheritor

A client in his 50s unexpectedly inherited USD 10m from a wealthy family member he barely knew existed. He had lived a comfortable but modest life, working a professional job, managing a reasonable household budget. Suddenly, he had access to generational wealth.

Within two years, he had lost over half of it.

He insisted on managing the money himself, convinced he could generate higher returns than our wealth management team. He began trading foreign exchange and equities, instruments he did not understand. He chased performance, moved between strategies based on short-term results, and refused the holistic advice we offered repeatedly about diversification, time horizon, and risk management appropriate for his family situation.

The wealth evaporated not because of malice but because he had never developed the capability to manage significant assets. He lacked the framework for stewarding multi-generational wealth. No one had taught him.

The Trust That Failed Its Purpose

I advised a family where the first generation had built substantial wealth and established a USD 30m trust specifically to protect it across generations. The structure was sophisticated, designed by excellent attorneys, intended to provide long-term security for heirs and beneficiaries.

But the founder made one critical error: he never educated the next generation about why the trust existed or how it functioned.

When he died, his heirs could not wait to dissolve the trust and access the capital directly. They saw the structure as an obstacle to their freedom rather than a safeguard of family wealth. They viewed the trustee as an adversary rather than a fiduciary protecting their interests.

The trust was eventually dissolved. The wealth, no longer protected by structure or guided by education, will almost certainly disappear within two generations. Not because the heirs are irresponsible people, but because they were never taught to think about wealth as a multi-generational system requiring stewardship.

The Entrepreneur Who Succeeded Too Well

I worked with a client who built substantial wealth through private equity. He is extraordinarily capable, deeply entrepreneurial, and genuinely loves his children. He wants them to be happy and worry free.

So he hides his bank statements. He refuses to involve them in any discussion of wealth management. He insists they should not have any financial concerns or responsibilities. He enjoys his role as sole provider and protector.

His children, now adults, have no idea how the family wealth is structured, where it is invested, what it generates, or how to manage it. When he dies they will inherit substantial wealth with zero preparation.

He believes he is protecting them. In reality, he is setting them up for potentially the same outcome as the sudden inheritor I described earlier.

The Families Who Get It Right

The pattern is not universal. I have also advised families across three generations who maintained and grew their wealth successfully.

One family I worked with was already in their second and third generations when I began advising them. The current generation, ranging from their 40s to 50s, all worked together in real estate development. Everyone had clear roles. Decisions were made collaboratively but efficiently.

The family assets held at the bank were invested in a balanced, diversified portfolio managed according to a clear investment policy statement. We met quarterly to review performance, discuss market conditions, and consider any adjustments.

What made them different was their temperament and time horizon. When markets crashed, they did not panic. They did not call demanding we move to cash or change strategy. They understood that volatility is normal, that their investment horizon stretched across decades, and that reacting emotionally to short-term movements destroys long-term returns.

This discipline was not natural talent. It was learned. It had been taught deliberately, starting when they were children, and reinforced through practice and observation across their entire lives.

The difference between these families and the ones who lost everything was not intelligence, work ethic, or initial wealth. It was financial capability, developed systematically over time, starting much earlier than most people think possible.

What Starting Early Actually Means

Before we go further, I need to address a critical misunderstanding.

When I say financial education should start at age three, I do not mean overwhelming young children with adult financial stress. I do not mean teaching them to worry about money or creating a scarcity mindset. I do not mean making them feel the family is under financial pressure or cannot afford things.

That approach creates anxiety and damages the child's relationship with money in ways that persist into adulthood.

Instead, early financial education means introducing age appropriate concepts in positive ways that build capability without creating fear. It means teaching children that money is a tool for living according to your values. It means showing them that understanding money creates freedom, not restriction.

It means building a foundation of financial competence so they can make good decisions throughout their lives, regardless of how much wealth they eventually manage.

If You Missed the Early Window

If your children are already past age seven, or if you are an adult who never received this education yourself, nothing catastrophic has occurred.

The best time to start building good money habits is today.

Financial capability can be developed at any age. It simply requires more conscious effort when you are correcting established patterns rather than building from scratch. The principles remain the same. The activities and conversations adjust for developmental stage and current understanding.

This article provides a roadmap for every age, including what to teach adults who are starting from zero financial literacy. Use what applies to your situation right now.

Ages 3 to 5: The Foundation Years

What They Can Understand: Money Represents Exchange

Children at this age are learning cause and effect relationships. They understand simple transactions. Their thinking is very literal and concrete. Abstract concepts will not register yet, so attempting to teach them creates frustration for everyone.

From a wealth management perspective, this stage establishes the most fundamental principle: money is a tool for exchange, not a magical resource that appears without origin or limit.

Core Money Concepts for Ages 3 to 5

1. Money exists in different physical forms

Make it tactile. Let them hold coins, sort them by size and color, stack them, examine the details. Children this age need to see, touch, and manipulate objects to internalize concepts.

Practical activity: Provide a jar of mixed coins. Ask them to sort by type. Do not worry about teaching monetary values yet. Recognition and categorization come first.

Why this matters: In my practice, I have seen adults struggle with abstract financial instruments because they never developed comfort with basic building blocks. Familiarity with physical money creates comfort with financial concepts later.

2. We exchange money for goods and services

Take them shopping and make the transaction visible. Let them watch you hand money to the cashier and receive items in return. Better yet, let them hand the money over themselves.

What to say: We are giving the shopkeeper five francs, and she is giving us this bread in return. That is how we buy things we need.

The physical act of exchange reinforces the concept more powerfully than observation alone.

3. Money is limited in supply

This is challenging for young children. They perceive money as infinite because they do not yet understand its origin.

How to introduce scarcity without creating anxiety: We have ten francs for treats today. We can buy chocolate or biscuits, but not both. Which one do you want more right now?

Let them make the choice. Let them experience that selecting one option means foregoing another. This is the earliest introduction to trade-offs, though you will not use that term yet.

Critical distinction: You are teaching decision-making within limits, not teaching them the family cannot afford things. Frame it as this is what we are spending today not this is all we have.

4. Money is stored safely in designated places

Start with a clear jar so they can watch money accumulate. Visibility is critical because abstract concepts like account balances do not exist in their cognitive framework yet.

Why transparent containers work: Watching coins stack up provides tangible proof that saving functions as promised. They can see progress, which reinforces the behavior.

What Not to Teach Yet

Do not introduce interest rates, investing, or long-term planning. These concepts are too abstract. Do not discuss the family's financial situation or make them feel responsible for household financial decisions. Their job is to be children. Your job is to introduce foundational concepts in age-appropriate ways.

Ages 6 to 8: The Builder Years

What They Can Understand: Work Creates Money, Choices Have Trade-offs

Children at this stage are developing logical thinking. They understand that actions lead to predictable outcomes. They can delay gratification for short periods, measured in hours to weeks, though not yet months or years.

This is when financial education shifts from recognition to understanding causation.

Core Money Concepts for Ages 6 to 8

1. People perform work to earn money

Establish the connection between labor and income. Explain what you do professionally in simple, specific terms. Avoid vague descriptions.

Why specificity matters: Children need concrete images. Abstract job descriptions create no mental model they can reference.

2. Expenses divide into needs and wants

This is arguably the most critical financial skill you can teach, and it applies at every wealth level.

I have advised clients managing hundreds of millions who struggled fundamentally with this distinction. They confused wants with needs, which led to unsustainable spending patterns despite enormous resources. The sudden inheritor I mentioned earlier could not distinguish between the two, which is partly why he lost half his wealth so quickly.

The sorting exercise: Go through your shopping basket together. Point to each item. Ask: Do we need this to survive and function, or is it something extra we want?

No judgment, just categorization. The goal is developing the mental framework for distinguishing essential from discretionary spending.

3. We earn money by providing value to others

Introduce payment for extra tasks, carefully distinguishing these from basic family responsibilities.

Structure it this way: Normal household contributions like making their bed or cleaning their room receive no payment. These are responsibilities that come with being part of a family. Extra tasks like washing windows or organizing the garage can earn payment.

This teaches that money represents value provided, not entitlement. This principle operates identically whether you are earning an allowance at age seven or negotiating a salary at age 27.

4. Saving means deferring gratification for something better

They can now grasp saving for short-term goals, typically two to four weeks into the future.

The savings chart method: Select something they want that costs CHF 40 to CHF 50. Create a visual chart divided into sections. Each time they save CHF 10, color in a section. When complete, purchase the item together.

The visual progress is essential. They need to see how small amounts accumulate into meaningful sums.

5. Purchasing one thing means foregoing something else

Introduce trade-offs explicitly and repeatedly.

The scenario: You have CHF 20. This toy costs CHF 15 and that book costs CHF 12. You can only choose one. Which matters more to you right now?

Let them wrestle with the decision. Do not rush them. Financial maturity develops through practice making difficult choices, not through being told what to choose.

What Not to Teach Yet

Do not introduce complex investing concepts. Do not discuss credit and debt, which remain too abstract. Avoid percentage-based thinking, which is developmentally challenging until they have stronger mathematical foundations.

Ages 9 to 12: The Independence Years

What They Can Understand: Money Grows, Time Matters, Decisions Have Long-Term Effects

Children can now think abstractly. They understand future consequences of present actions. They are also becoming aware of social comparisons and peer influences around consumption.

This is the stage when financial education accelerates significantly because their cognitive capacity has expanded.

Core Money Concepts for Ages 9 to 12

1. Money grows over time through compound interest

This concept becomes accessible now, though it must be explained carefully.

How to explain compound interest properly:

Imagine you deposit CHF 100 into a savings account at the bank. The bank pays you interest, a small amount of extra money for keeping your funds there. Let us say the interest rate is five percent per year. After one year, you have CHF 105.

The following year, the bank calculates interest on the full CHF 105, not just your original CHF 100. So you earn interest on your previous interest. This means you receive slightly more than CHF 5 in the second year. Now your balance is CHF 110.25.

Each subsequent year, you earn interest not only on your original deposit but on all the accumulated interest from previous years. That is how money grows by itself. You do nothing except leave it undisturbed and allow time to work.

The key insight: Emphasize that time is the most powerful variable, not the initial amount. Starting early matters more than starting with substantial capital.

This is the same principle I emphasized with clients in their 30s and 40s. The compounding period matters more than almost any other factor when building long-term wealth. The families who understood this maintained their wealth. Those who did not often lost it chasing higher short-term returns.

2. Real banking systems and savings accounts

Open an actual savings account together. Let them deposit money. Show them the balance statement. Explain how the bank tracks their funds and pays interest.

What this teaches: Money in a bank is real and tracked precisely. It earns returns even when you do nothing. They can monitor their wealth growing over time.

This demystifies banking and creates comfort with financial institutions. I have worked with adult inheritors who felt intimidated by banks and financial systems because they were never exposed to them as children. That intimidation led to avoidance, which led to poor decisions.

3. Budgeting involves dividing money into categories

Provide a monthly allowance and help them allocate it across categories:

Spend for whatever they want in the moment, Save for larger goals requiring accumulation over time, and Give for charity, helping others, or causes they care about.

Let them manage this independently. Some months they will exhaust their spending allocation early. That is the lesson. Natural consequences teach more effectively than lectures.

This three-category framework is what I recommended to clients establishing financial systems for their children. It is simple enough to implement but sophisticated enough to teach genuine budget discipline.

4. Investing means putting money to work

Do not overwhelm them with stock market mechanics. Just introduce the foundational concept:

When you invest, you purchase ownership in companies that can grow over time. If the company performs well and becomes more valuable, your investment grows with it. Investing carries more risk than a savings account because companies can also perform poorly, but over long periods, investments typically grow faster than savings accounts.

Keep it high-level. Details can come later.

5. Advertising exists to manipulate desire

Children at this age are old enough to understand persuasion tactics and should be taught to recognize them.

The conversation: That advertisement made the toy look amazing, correct? That is the advertiser's job: to make you feel like you need to buy it immediately. But do you genuinely want it, or did the advertisement simply convince you? Let us wait one week. If you still want it then, perhaps it is worth purchasing.

This teaches critical thinking about consumption, which is remarkably rare even among wealthy adults.

6. Opportunity cost describes what you sacrifice when choosing

Make opportunity cost concrete and specific:

You want to spend CHF 60 on this video game. That is perfectly fine. But it means you will not have those CHF 60 available for something else. What other purchases were you considering? Are you certain the game matters more than those alternatives?

The goal is not preventing them from buying things they want. It is making them think through trade-offs before committing.

This is the same analytical framework I used when advising clients on major capital allocation decisions. Every choice to invest in one opportunity represents a choice not to invest in alternatives. Understanding this explicitly leads to better decisions.

What Not to Teach Yet

Do not discuss tax strategies. Do not introduce complex investment vehicles or attempt to explain hedge fund structures. These concepts add no value at this stage and risk creating confusion.

Ages 13 and Beyond: The Young Adult Years

What They Can Understand: Nearly Everything, Introduced Gradually

At this stage, adolescents are ready for real-world financial practice with appropriate supervision and safety nets.

Key Concepts to Introduce

1. Credit and debt mechanics

Explain how borrowing works, why interest rates on debt differ from interest rates on savings, and what happens when debt is not managed properly.

Show them real numbers. If you borrow CHF 1,000 at 18 percent annual interest and make only minimum payments, how long until it is repaid? How much total interest do you pay? Let them calculate it themselves.

2. Investing with real capital

If possible, open a custodial investment account with real money. Let them research and select a few stocks or funds. Let them experience the volatility. Let them watch investments rise and fall.

Real capital creates real learning. Even a small amount, perhaps CHF 500 or CHF 1,000, is enough to make the experience meaningful.

This is how the most financially sophisticated families I advised approached this stage. They gave children real money to manage, with real consequences, within a controlled environment. Not enough to cause financial damage if lost, but enough to make gains and losses feel genuine.

3. Tax systems and civic responsibility

When they start earning income from jobs, show them the deductions on their pay statement. Explain where tax revenue goes and why taxation exists.

This is also when you can introduce the concept that tax strategy is legal and appropriate, but tax evasion is not. Wealthy families understand this distinction clearly.

4. The extraordinary power of starting early

Show them compound interest calculators. Let them experiment with different starting ages and see how the outcomes change.

The visual impact of starting systematic investing at age 15 versus age 25 is staggering. A ten-year head start, even with modest amounts, can mean hundreds of thousands of francs in additional wealth by retirement.

5. Financial independence as a realistic goal

Discuss what financial independence actually means. Not necessarily early retirement, but having enough assets generating returns that work becomes optional rather than mandatory.

Explain that expenses determine the wealth required for independence. If you need CHF 40,000 annually to live comfortably, and your investments generate a four percent return, you need CHF 1m invested. If you can live on CHF 30,000 annually, you need only CHF 750,000.

This teaches that controlling spending is just as important as earning more income, and often easier to achieve.

The Skill That Matters More Than Any Specific Lesson

After 15 years managing wealth for high-net-worth families I learned that the wealthiest clients were not always the most financially confident. And the most financially confident clients were not always the wealthiest.

Financial confidence is not about knowing every technical term or making perfect decisions without error.

It is about feeling comfortable discussing money without shame, embarrassment, or stress. It is about understanding that money is a tool for living according to your values, not an end in itself. It is about knowing you can learn what you need to know when you encounter unfamiliar financial situations. And it is about making decisions aligned with what genuinely matters to you, rather than what appears impressive to others.

The adult children of clients who started financial conversations early were consistently more capable, more confident, and less anxious about money than peers who received no financial education until late adolescence or adulthood.

They asked better questions. They understood trade-offs intuitively. They made decisions based on their actual goals rather than reacting emotionally to market movements or social pressure.

That capability, developed systematically over time, is what protects wealth across generations.

The Most Common Mistake Parents Make

The most frequent error is waiting until children are old enough to understand everything before teaching them anything.

Financial education should begin at age three, not age thirteen. The earlier you start, the more time these lessons have to compound and become internalized.

The second most common mistake is the opposite extreme: hiding all financial information from children in an attempt to let them "just be kids" without worry.

The entrepreneur I mentioned earlier, the one who hides his bank statements from adult children, genuinely believes he is protecting them. But he is actually preventing them from developing the capability they will desperately need when he is gone.

Children do not need to know every detail of family finances. They do not need to feel financial stress or worry about household bills. But they do need to develop financial capability appropriate to their developmental stage, built systematically over time.

The balance is teaching them about money as a system and a tool, without burdening them with adult financial responsibilities or anxieties.

Your Next Step

Review this roadmap and identify where your child is developmentally right now. If you are an adult who never received this education, identify where you are in your own financial capability journey.

Select one concept that has not been addressed yet, something appropriate for the current stage.

This week, find a natural moment to introduce it. Do not force it. Do not create a formal lesson that feels like school. Just weave it into daily life when the opportunity presents itself.

That is how financial literacy actually builds. Not through lectures, but through repeated exposure in context over extended periods.

The families who maintained wealth across generations did not do it through occasional big conversations. They did it through thousands of small moments over decades, building capability brick by brick.

You can start building those bricks today, regardless of your child's current age or your family's current wealth level.

About Learn With Ebba

I am a wealth management professional with 15 years of experience advising high-net-worth clients across Zurich and London. I translate the wealth management principles used by ultra-high-net-worth families into practical guidance that any family can use to build financial confidence and capability across generations.

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