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Financial Literacy for Kids

It's Financial Literacy Month! 

How did your parents teach you about finances? Do you remember the first job you had or the first thing you bought with your own money when you were a kid? My colleagues, Baylee and Griffin, and I sit down and discuss the four main fundamentals of finance that parents can use when teaching their children about spending, giving, saving, and investing. 

As a parent, teaching your kids about finances can seem challenging. Although discussing the topic of money with your kids can be uncomfortable, it is a necessary step in their development. In our video, we provide several approaches and even first-hand experiences of how parents can discuss money matters with their kids and help them develop the skills to have good financial habits. 


Using the four main fundamentals of finance - spending, giving, saving, and investing in personal and relatable experiences is one of the best ways for your children to learn finance. To build on those fundamentals I've also outlined additional creative approaches to further emphasize the importance of money and finance. This will give kids a real-life example of how to handle money responsibly and a key life skill that will help them make sound decisions in the future. 

Let Them Earn It

Financial literacy isn't just about talking and teaching kids how to spend, save, and invest. It's also about giving them the opportunity to earn their own money. Whether it's through chores or part-time jobs, letting your kids work for their money will help them learn the value of a dollar. One of the best things you can do for your children is to instill a good work ethic in them by letting them earn money on their own. Whether your teen works part-time at the movie theater or you help your little ones start a lemonade stand or lawn mowing service, these opportunities allow them to learn the responsibility of earning a dollar. The willingness to work hard and be rewarded is one of the most invaluable financial lessons you can pass on to them.

Let Kids Experiment

One effective way to help kids learn how to financially plan and make budgets is to give them the chance to make mistakes on their own. A small allowance each week is the perfect incentive for children to learn how to budget. Do they want to blow this week's money on candy, or save up a few weeks to get something they really want? Of course, some children will still be impulsive and want to spend their funds right away, but better they learn to make mistakes with $10 than $1,000. 

Encourage Savings

It's never too early to start teaching your children the importance of saving money. One way you can do this is by setting up a savings account for them, and helping them deposit a portion of their allowance or earnings into it each week. You can also match whatever they save, so they have an extra incentive to keep adding to their account. Another option is to give them a "spending jar" and a "saving jar," so they can see firsthand how their money grows when they save it.

Make Giving a Priority

Teaching your kids the value of giving back is one of the most important things you can do to instill good financial habits in them. Talk to them about why it's important to give to others, and help them choose a charity or causes they're passionate about. You can also involve them in fundraising activities, such as bake sales or car washes, so they can see firsthand how their efforts can make a difference.

Include Children in Household Budgeting

Try including an older child in budget planning for the next month. Kids learn quickly when they have to stay home bored for two weeks because they blew the entertainment fund during the first half of the month. On the other hand, if they help save for a goal, such as a new game or toy, they'll be more likely to appreciate it when they finally get it.

Another great idea is for parents to take their children shopping and help them compare prices and make wise purchase decisions. Set a grocery budget for an upcoming trip, make your week's list, and then take your child to the grocery store with you. As you place items in your cart, have your child add up the cost of each item until you hit your limit. This is another great exercise in making choices based on limited funds. 

Encourage Them to Take a Class

Growing up I took a class in school where we played The Stock Market Game. Using fake play money, we would buy and sell stock in a trading simulator It was a fun way to learn how the stock market worked, but more importantly that in order to see your investments grow you had to make good decisions. Few schools teach courses on how to handle money the right way or offer exercises like the one I participated in, but if you find one being offered, I highly recommend you encourage them to enroll. 

Set Financial Goals

Another key component of financial literacy is setting goals for yourself and your family when it comes to saving and spending money. Work with your kids to set realistic goals - whether that be on a short-term basis or long-term - so they can understand what it means to plan ahead financially and have clear objectives for reaching those goals.

Learn Financial Terms

Financial literacy isn't just about the basics. It's also about understanding financial terms and concepts like compound interest, stocks, bonds, etc. As your kids grow older, introduce them to a variety of new finance-related terms so they can stay on top of important concepts as they get older.

Encourage Financial Conversations

It's important to have regular financial conversations with your kids, especially as they start to become teenagers and enter adulthood. This can be a difficult topic for some families to broach, but it's essential for helping your kids understand money and its importance. Talk about things like income, taxes, debt, credit, savings, and investing. The more you open up the lines of communication about money, the better equipped they'll be to make sound financial decisions in their own lives.

The Bottom Line

Whether you are the parent of a teen or a rambunctious toddler, I hope these examples and ideas inspire you to start the discussion of finance and equipping your kids with the right tools to make sound financial decisions for years to come. You can start teaching your kids about money at any age, and the sooner you start, the better equipped they will be to manage their finances as they grow older. Financial Literacy Month may only come around once a year, but Financial Literacy should be celebrated every day! Be sure to check out our other Financial Literacy blog posts for more ideas and best practices.  

AUTHORED BY AUSTIN LINS - ASSOCIATE FINANCIAL ADVISOR