Teaching Financial Literacy to Children

According to the Council for Economic Education, in 2022 just 23 states require students to take a class in personal finance to graduate from high school. It is up to parents to teach their children about financial literacy!

You can start with young kids by talking about "needs" versus "wants." Focusing on gratefulness is perfect at this age. It is important for children to learn to be thankful for having their needs met and recognizing that any wants are "extra icing on the cake." As they grow a little older, encouraging kids to pay half the cost for a new Lego set or an American Girl accessory will give them a better sense of what things cost. Playing a game such as Monopoly or Life can also teach children the value of money. Dr. Laura Levine, President of the Jump$tart Coalition, points out, "Games are a great way to break down the complexity of financial concepts and make them accessible and enjoyable for children." As you play, discuss some of the costs associated with living and talk about measuring risk versus reward. If you are consistent with it, the conversations will grow in complexity and end up being really great bonding moments!

As children grow up, they can be given more responsibilities in the household. Earning an allowance introduces kids to the value of money and making choices for themselves. If you don't want to use cash, family-oriented apps like BusyKid and Greenlight let you assign a dollar amount to each task and send the funds to their account with a few quick taps on your phone. Encourage your child to save some money, donate some money, and keep the rest for spending. In the early stages, it's not as much about the amount saved, but about instilling the habit of saving.

If you spend lots of time in the car with your children, consider adding a podcast to your weekly routine. One great financial podcast geared towards kids is Million Bazillion from Marketplace. Some topics include "Why do some jobs get tips but not others?" and "Why do countries have different currencies?" More times than not, I end up learning new things while listening to Million Bazillion with my son!

While middle school and high school can be a busy time for adolescents with homework, sports, and extracurricular activities, if your children can spare a few hours per week to work, they will probably be better for it. Coffee shops, fast food restaurants, or retailers are a good place to look, especially once your child can drive. Before that, check with people you know; your young teen could walk the neighbor's dog, feed a friend's cat, or mow a few yards. Giving teens freedom with their money earned can leave a long-lasting impact on their financial future.

While it may be somewhat difficult, be open and honest with your child about your family's finances. Parents often worry that being too candid will only lead to worry, especially when experiencing a job loss or other family financial problems; however, kids will be better equipped to handle their issues if they know how to respond. Let your children help with creating the family budget. "When children are involved in budgeting, they gain a sense of responsibility and understanding of financial limitations," says Sophia Bera, a certified financial planner and founder of Gen Y Planning. These conversations will help your children grow into financially responsible adults.

Teaching financial literacy to children is a fundamental step towards preparing them for a financially secure future. By incorporating financial education into everyday activities, parents can help children understand the importance of money management. As parents, we can equip the next generation with the tools they need to thrive in an increasingly complex world.

The content in this article provides general consumer information. It is not legal advice, financial advice, or regulatory guidance.