Now, more than ever, the importance of financial literacy is crucial in today’s fast-paced world. Teaching our children how to understand money (how to earn it, save it, invest it, and spend it wisely) is a vital life skill that should be taught from a young age.
I look for every opportunity to introduce my children to financial concepts early on because I know that it will set the foundation for them to have a financially responsible future. Teaching personal financial literacy for kids matters and in this post, I have several tips and resources to help.
This post is sponsored by Beyond Personal Finance. My time was compensated however all opinions are my own.
The Importance of Financial Literacy for Kids
There are so many pitfalls and schemes out there that prey on the uninformed when it comes to money. Helping our kids learn how to avoid these traps and snares is key. If you think they’re too young, think again! It’s never too early to start teaching personal financial literacy for kids. Here are just a few good reasons:
Establish Healthy Money Habits
Children who learn about money management early on are more likely to develop healthy financial habits. This includes saving regularly, understanding the value of money, and making informed spending decisions. Helping them learn how to build good money habits is essential.
Avoid Debt
By understanding the consequences of debt, kids can learn to avoid unnecessary borrowing and the pitfalls of high-interest rates and high debt-to-income ratios. They become aware of the importance of living within their means and use self control.
Prepare for the Future
Financial literacy prepares kids for real-world challenges. As they grow, they’ll need to make decisions about student loans, mortgages, and investments. Learning how to prepare for the future equips them with the knowledge to navigate these complexities when they arise.
Encourage Responsibility and Independence
Teaching your children how to manage their own money teaches them responsibility. It encourages independence as they learn to make their own financial decisions and understand the outcomes. Taking personal responsibility is the ultimate goal in independence.
Be Good Stewards
Teaching children to be good stewards of their money emphasizes the importance of managing the resources God has given them wisely and responsibly. This includes understanding the impact of their financial choices on themselves, their families, and others.
Practical Tips for Teaching Kids About Money
It’s always good to be practical, right? Kids need practicality and teaching them in a practical way will help them avoid frustration.
Start with the Basics
This is great to start at an early age. Start by introducing simple concepts like saving, spending, and sharing. When my kids were younger, I started them out with their own piggy bank which I made using a clear jar. Using a clear jar rather than a cute ceramic piggy bank helps younger children visualize saving money.
Set a Good Example
Kids learn by observing. Setting a good financial example for our children is not only biblical, but it also demonstrates good financial habits when they see us budgeting, saving, and making thoughtful purchases. When appropriate, I may discuss minor financial decisions with my children to help provide them context for certain situations.
Use Real-Life Experiences
I also like to involve my children in simple everyday financial activities like grocery shopping. They learn how to budget for household expenses, and we discuss the importance of shopping for the best deals by comparing prices.
Give an Allowance
Providing a regular allowance can teach kids about earning and managing money. Find ways to help encourage them not to spend all of their allowance but instead save a portion and set goals for larger purchases. Completing chores is a great way for kids to earn an allowance. I made a Star Wars themed chore chart that’s great for keeping track!
First Time Job/Entrepreneurship
Earning money puts an entirely different perspective on finances for kids. Learning different skills that helps your kids earn money or pursue their passions and start a business is a great way to help teach financial literacy. Our kids enjoy selling lemonade at their lemonade stand!
Teach Budgeting
As children get older, introduce the concept of budgeting. Help them create a simple budget for their allowance, job, business, or any money they receive as gifts. Teach them to how track spending and adjust their budget as needed.
Teach Banking
As they mature, or when they get their first job or start a business, open a student checking and savings account for your child. Teach them how to deposit money, read bank statements, and understand the concept of interest. If they’re not old enough for a bank account, GreenLight or GoHenry is a great option for kids to learn about money management.
Teach Goal Setting
Talk about the importance of saving for long-term goals, such as a car, a house or another high ticket item. Help them understand how setting aside money now can lead to significant benefits in the future. A way we help our kids do this is setting up a wish list on Amazon. If there’s something they really want, we put it on the wish list and set a goal for them on how they will save up or earn money to purchase the item.
Bill Paying Habits
Financial literacy for kids includes teaching how to pay bills on time. It’s so important to learn how to pay bills on time to avoid late fees and hits on credit scores. Speaking of credit, teaching them how credit works is also encouraged. Teach the pros and cons about credit and discuss with them the positive and negative impact of debt on financial health.
Encourage Giving
Teaching our children about being generous and value being a cheerful giver is an important aspect of financial stewardship. Giving back can range anywhere from donating to a charity, helping those in need, or giving tithes and offering at church.
Resources for Teaching Financial Literacy
Books and Games
There are numerous books and board games designed to teach kids about money. The Bible is a great place to start! However, there are many titles like “Financial Literacy Activity Book” and games like “Financial Peace Kids” that can make learning about money fun. Check out my Amazon Storefront with over 15+ ideas!
Homeschool Curriculum
Adding a financial literacy unit to your homeschool is wise. Before Personal Finance, A Beginners Guide To The Future, is an excellent option. The creators, Beyond Personal Finance, have 3 distinct areas that sets them apart. They make every effort to go above and beyond to make lessons and activities personal, real, and interactive. Their goal is to help younger generations become wise, grateful, and equipped when it comes to their finances.
Before Personal Finance is the first level beginners guide designed for elementary children ages 8-12. It introduces important money concepts such as smart spending, saving, investing, borrowing and more.
With an avatar named “Future You” your kids will go on a financial journey in 10 lessons that will introduce to them different financial experiences and twists. “Future You” will make decisions about earning, spending, giving, saving, and even purchases like cars!
This full color 150 page workbook can be done independently, 1 on 1 with a parent or with a group. I opted for independent work for my daughter. If she needs help figuring out something, she asks me for help which makes the Teacher materials come in handy. A link to the Teacher materials is provided in the book and includes short “how to” video, answer keys, activity resources and more.
Before Personal Finance has been a wonderful addition for my 4th grader. She has an entrepreneurial mindset and helping her hone in financial skills now will take her far in life. I love that it’s teaching her a much needed life skill.
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How Do You Teach Financial Literacy For Kids?
Financial literacy is a vital skill that empowers kids to make informed financial decisions throughout their lives. By starting early and incorporating practical lessons into everyday activities, you can equip your children with the knowledge and confidence to manage their finances effectively.
Comment below some of your favorite ways to teach financial literacy!
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