A Guide To Financial Literacy for Kids

There’s no doubt about it, money management is an extremely important life skill. Once your kids start earning allowance, getting birthday cards from grandparents, and being visited by the tooth fairy, it’s time to start teaching them about financing. But it doesn’t end there, kids as old as high school and college are still learning. Read on for tips on how to start teaching your kids at any age level. Don’t miss our podcast on Preparing Kids for Property Ownership for even more ways to teach your kids about financing.

Opening a Bank Account

Especially if you’re paying your child a weekly allowance, a bank account is essential. Most banks offer kids and student checking and saving accounts. There are even some online educational banking apps like Greenlight that allow children to track their chores and earnings, set savings goals, and more, giving them a leg up in the financial literacy game.

Learning Financial Vocabulary

Make sure your kids understand the basic terms of financing. Start with defining budgeting and saving and as they get older teach them about investing, taxes, credit, debt, rent, mortgages, and so on. You can even have them sit with you as you plan out your monthly budget so they can see it in realtime.

Earning Money

As they get older, they’ll want to start earning more than that $5 weekly allowance. If they’re not old enough for employment, you can start by having them do odd jobs for you, friends, or family members to earn money. Once they are legally able to work, you can encourage them to look for a part time job so they can earn their first paycheck.

Creating Goals

Whether you’re budgeting or saving up, it’s important to have set goals in mind. Maybe it starts as small as wanting a brand new $70 video game or saving for a new bike. Calculate how many weeks of pay is required to purchase the next big thing and create a plan to get there.

Financial Responsibility

As they get older, it’s important to start teaching them about financial responsibility, interest rates, and loans. You can have them sit with you while you pay your bills and explain the process as you go along. Some parents like to have their kids start paying rent and a small portion of the bills to begin getting the hang of these concepts while they’re still at home. If you do this, you can also put that money into a savings account for them. There are also many financial literacy classes for high schoolers. In fact, Pennsylvania now requires them for all high school graduates beginning with the class of 2027, so make sure you take advantage and get them signed up for one!