Financial Literacy for Kids: Teach Them Early and Often

Financial literacy skills are crucial for success in our children’s future personal and professional lives. Yet, these important skills aren’t at the forefront of learning at many schools across the country.

The Council for Economic Education (CEE) 2020 Survey of States found that only 21 states require high school students to take a course in personal finance in order to graduate. And more than one in six students doesn’t reach the baseline level of proficiency in financial literacy.

As parents and caregivers, we can push for personal finance and economics curriculum in schools. But we can also fill in education gaps at home by weaving in financial learning into our kids’ everyday lives.

Key Financial Literacy Topics for Kids

Many adults struggle with managing their finances, so it’s important parents and caregivers take steps to teach the basic building blocks for financial literacy.

But what is financial literacy? And how do we teach it to our kids?

Financial literacy boils down to understanding how to effectively use financial skills. Key topics include:

  • Budgeting basics with an emphasis on responsible spending.
  • Saving for short-term and long-term goals.
  • Learning the value of earning a dollar.
  • The power of time (or the magic of compound interest).
  • Different ways to engage in financial giving (e.g. tithing or donating to a cause).

So, how do we go about teaching these important financial literacy lessons without making it seem dry or forced?

We use play and everyday interactions to model healthy money habits. By being intentional and introducing these topics early and often, you can help build a financial foundation that will serve them for the rest of their life.

Learning Through Play

It’s never too early to start teaching your kids about money. Kids of all ages can benefit from financial literacy books, games, and online resources. But for young children, learning through play is especially important.

Play promotes critical thinking skills and healthy development in children. It allows them to explore, problem-solve and practice life skills. And this concept of play as a learning tool extends to financial literacy.

Toddlers and kindergartners can engage in financial play by handling cash and coins. Use a clear jar as a piggy bank that way your child can visually see their money grow. Practice counting coins (with supervision) as a fun activity. Allow them to be the one to pay at the checkout line, so they begin to understand that every item has a cost.

Elementary school-aged children can learn through more advanced play. Online games like Learn to Count Money and old-school favorites like Monopoly can turn the concept of money into a more interactive and fun learning experience.

Teens aren’t too old to learn through play either. Reality-based games provide older kids with a challenging learning opportunity that goes beyond worksheets and lectures. For example, The Payoff game is designed for kids aged 14+ and places them in the shoes of two up-and-coming video bloggers that need to make smart financial decisions.

As with any subject, kids learn better when they’re having fun. So, get creative and introduce new ways for your children to learn and play with money.

Learning Through Responsibilities

Kids often lack perspective and assume money just grows on trees. A good dose of responsibility can connect children to the value of hard work.

You can foster independence by providing opportunities to take on age-appropriate responsibilities that promote money management skills.

Consider allowing your child to gain first-hand experience with money by:

Assigning chores with an allowance. This is a simple way to teach kids about earning money. However, it should be a family decision as there are arguments for and against paying children to complete housework.

Opening a custodial bank account. Use the account to save for your child’s goals and involve them in the physical process of depositing and withdrawing their money.

Creating a basic budget. Allow your child to watch part of your budgeting process and then mimic your actions with a very simple budget.

Getting a part-time job. A part-time job can help your teen gain valuable work experience and teach them important skills in managing their money and time.

Promoting entrepreneurship. We live in the age of the side hustle. Encourage your child’s entrepreneurial spirit by supporting childhood businesses, like a pop-up lemonade stand, monthly lawn care services, or whatever their creative brain comes up with.

Volunteering with a local community group. Provide opportunities for your child to volunteer and give back to their community. Although they won’t be paid for their efforts, they’ll learn other important life skills like empathy and commitment.

Most importantly, teach financial responsibility by leading by example. Our children are always watching us and internalizing what they see and hear. So, it’s important you evaluate your own relationship with money and make an effort to improve your financial habits for your child’s sake.

Learning Through Failure

Failure is a scary and uncomfortable concept for many people, especially when it comes to allowing our children to fail. But failure can be one of life’s greatest learning lessons.

I’m a firm believer in creating a safety net for your child, while still allowing them to fail within healthy parameters. Failure gives children an opportunity for growth and the ability to become more resourceful.

So, sometimes we have to step aside and allow our children to waste their birthday money instead of saving it. That way they learn there isn’t infinite money available for their next immediate want.

But instead of giving a quick “I told you so”, spend some time explaining the consequences of their impulse purchase. And discuss what options they have for the next time they’re faced with a similar money situation.

Children can also learn from our own money failures as parents. It can be difficult to share our financial situation with others, especially with our kids. But your children can benefit greatly from being open and transparent about your money mistakes.

Resources for Teaching Financial Literacy for Kids

There are many online resources and books to help teach financial literacy for kids. You can start by checking with your child’s school to see how you can better support their financial learning. Your local library may also have free resources and programs available to children and parents.

Here are some additional financial literacy resources to explore with your child.

Hands on Banking provides free youth resources and courses for elementary, middle and high school students. Materials are available in English and Spanish.

Counting Money Worksheets and Lessons has printable worksheets and play money to help young children learn about money and money math.

MyMoney.gov has various resources for youth, including games, activities, websites, video games and information about money for kids and parents.

The Consumer Financial Protection Bureau (CFPB) has many free financial education activities for parents to use with their kids.

Many parents find the topic of finances to be overwhelming. If you feel hesitant, start small and slowly incorporate new concepts over time. You might even find that your overall financial literacy increases as a result of teaching your children.

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