When my children were just toddlers, I made a commitment to raise them to be economically independent and empowered to make their own financial decisions. I wanted them to become financially secure and self-reliant. In order to do this, I focused on prioritizing their financial education as financial literacy for kids is a taught skill.
That being said, here are 7 impactful ways to teach financial literacy for kids. This will in turn help our young children become financially savvy adults:
1. Teach your kids independence and responsibility
Household tasks played an important role in teaching them independence and responsibility even though completing chores wasn’t linked to my kids’ allowance. Doing household tasks helps your kids understand what it takes to make money. Each child was responsible for making their bed, keeping their bedroom clean, setting the dinner table, and putting their laundry away at the end of the night.
Keeping the cracks in our long driveway free from weeds was also on the list! It was definitely not appreciated by them but I felt this task encouraged a strong work ethic so they had to do it! In addition, at summer camp they were required to clean toilets, wash clothes, or do dishes. While they often grumbled about the work, they later shared their thanks for giving them the skills necessary to live on their own.
2. Open a saving account for your child and take them through the process
What better way for kids to understand money than to have and manage their own? I gave my kids an allowance starting at age five. I committed to paying it weekly through college as long as they invested half of it into their personal savings accounts. By showing your children how you open their account, how to make deposits, and how to track their savings, you can impart valuable financial literacy for kids.
Parents can make a household rule that savings stay untouched until it affords its owner a valuable opportunity. This includes money from allowance and other income including gifts. In turn, your kids will one day be amazed at the doors that their savings will open for them.
3. Teach them why financial literacy for kids is important
Every day at the Women’s Business Development Council, I witness the women empowerment that education offers. Simply put, knowledge is power, and it will give your children the opportunity to make choices and follow dreams. So show your kids that learning about money is an important part of them having a successful future.
Put education at the top of your parenting priorities by setting expectations and celebrating educational success. Children learn by example and observation. Set up a college savings account as soon as possible. Research scholarships and take advantage of low-cost after-school enrichment and tutoring programs. And involve your children in the process. Involving them in these things will allow your children to build their financial confidence.
4. Leverage fun resources to impart financial literacy for kids
As you are teaching your children financial literacy, make the experience fun. Leverage fun activities, games, and books. Create weekly money dates or have weekly standing money conversations. The whole idea is to make talking about and dealing with money a comfortable experience for your children. Need ideas? Check out our free course on teaching your kids healthy money habits.
5. Teach your children the power of investing
When it comes to wealth building, investing is how you grow your money. And teaching your children how investing works at a young age can set them up for incredible success. Starting early will help them reap the benefits of compounding, appreciation, dividends, and more on their investments.
6. Challenge gender stereotypes
When it comes to financial literacy for kids, it's important that we don't allow them to fall into unsavory stereotypes. Traditionally, girls are encouraged to take on roles to care for others. The emphasis is on their nurturing capabilities rather than on their earning potential. However, who said girls don't have incredible earning potentials? Help girls become more comfortable with pursuing their ambitions and to be unabashed about their desire to make money.
Teach them to be in control and effect change. This in turn will help them understand that they can care for others with their own wealth. They can use it to invest in their families, communities, and in causes they support.
7. Leverage your village to raise financially savvy children
This last strategy is for you. Raising children is hard work and should not be done alone. Create a reliable support system to help you achieve the goals you have for your teaching your children. This support system should include mentors and other successful people in your life that can impart wise financial and life teachings to your children.
My village was a lovingly cobbled together mix of savvy female friends who shared their professional acumen (to help me start a business to support my family and others). They offered parenting advice and gave me access to their nannies and babysitters to care for my kids while I worked. My children benefited from their support and perspectives as much as I did.
Economic self-sufficiency is one of the most important and perpetuating lessons you can teach your children. With education and know-how, broader perspectives and the support of others, your children will be able to explore their dreams. They'll get to know their world, and help to forge change that will empower and inspire others to do the same.
My children's’ financial savviness and their childhood savings accounts eventually grew to offer opportunities they could have otherwise not afforded. For instance, the ability to study abroad, go on extensive international travel and have a year of income while holding out for a dream job in a new city.
Their confidence empowers them to make good choices because their personal savings served as a source of independence. If you're a parent, what are you doing to empower tomorrow's generation? Don't underestimate the change that financial literacy for kids can have in the world.