Financial Literacy for Kids: How to Raise Them Well

Financial Literacy For Kids

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.

Money knowledge is valuable, so let’s talk about why teaching kids financial literacy is important, and how to do it effectively!

Why teaching kids financial literacy is important

Kids grow up quickly, and soon, they’ll be responsible for many financial decisions. But a lot of young adults and college students don’t know much about money.

It’s essential that they begin to learn important financial concepts, like how to save and budget, when they’re young. It will give them many years of practice before their choices impact their future in a significant way.

If kids are allowed to learn with money in these early stages, they’ll be much better equipped to make good choices later on.

Kids’ financial literacy basics

Before you learn how to teach financial literacy for children, what are the most important money management skills they need to know? Teach these basic financial skills first. It’s a good idea for kids to learn about:

Earning an income

Knowing what to do with money once you have it is important. But teaching kids about earning money is an essential step. They need to understand how to earn, starting with small kid-friendly jobs, such as mowing lawns or babysitting, and then moving into regular jobs as teens.


Once kids get some money, they need to know how to organize it. Budgeting will help your kids understand financial goals, math skills, expenses, and financial responsibilities. It creates an understanding that money should be used to take care of their expenses, as well as used for fun.

Saving money

Saving is a big part of personal finance, and learning this early on can only help. There are plenty of ways to teach savings, starting with helping your kids to set aside some money each time they earn. When they’re very young, a piggy bank may work, but a savings account will be appropriate as they get older.

Good habits overall with money

Teach your children good financial habits. It includes making wise spending decisions, goal-setting, and opening a bank account. Knowing how much money they have and having a plan for it will help them create good habits early.

7 impactful ways to teach financial literacy for kids

Speaking of good money habits, here are 7 impactful ways to teach financial literacy for kids. It will in turn help your young children become financially savvy adults:

Financial Literacy for Kids

1. Teach your kids independence and responsibility through chores

Household tasks played an important role in teaching my kids independence and responsibility even though completing chores wasn’t linked to their allowance.

My kids were responsible for making their bed, keeping their bedroom clean, setting the dinner table, and putting their laundry away at the end of the night. Chores teach kids what it is to work hard and the value that comes from it. Doing household tasks helps your kids understand what it takes to make money.

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 to help kids financial literacy than to have them manage their own money? 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 accounts, 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. Savings 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. Educate your children about finance concepts

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, as this is part of financial literacy for children. Research scholarships and take advantage of low-cost after-school enrichment and tutoring programs. And involve your children in the process, as it will allow them to build their financial confidence.

4. Leverage fun resources to impart financial literacy for kids

As you’re teaching your children financial literacy, make the experience fun. Leverage fun activities, games, and money books for kids.

Create weekly money dates or have weekly standing money conversations. You can even have them pursue some great business ideas for kids!

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. And here are some financial literacy games for kids.

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