Budgeting & Saving

Financial Literacy: How to Teach Your Kids

Whether you have your own kids or you're just the cool aunt or uncle, you have the opportunity to act as a role model and teach the children in your lives about a lot of different things. While some of these—like financial literacy, credit and protecting your identity—may not seem like fun, they are valuable life lessons that can help the kiddos make and keep their money. (See also: How to Protect Your Child from Identity Theft)

Money Talks

How to Teach Your Kids Financial Literacy

Out of all the conversations we have with our children, finances may be one of the most important. Early lessons about personal finance and money management can help them avoid issues later in life. Schools don't always offer courses on personal finance and credit, so make sure you take ownership of teaching your kids about money matters. Read on for useful tips to help educate your children early and set them up for future financial success.

1 in 4 people

lose more than $30K across a lifetime because of limited financial understanding.

Only 17 states

require a personal finance course
for high school students.

From Preschool to Kindergarten:

Plant seeds early

By ages 2—3, toddlers can begin to learn attitudes and skills that will benefit their financial health later in life, such as:


Just like waiting in line for the monkey bars, teach your kids that practicing patience pays off.


Read stories centered around finance to your toddlers and ask them questions.

  • "How the MoonJar was Made" by Eulalie Scandiuzzi
  • "Lemonade in Winter: A Book About Two Kids Counting Money" by Emily Jenkins

Task completion

Practice sorting money, such as splitting $1 bills in one stack and $5 bills in another.

Elementary School:

Teach Good Habits

Kids heading into elementary school begin to pay more attention to what's going on around them. Ensure they're learning good financial habits by:

Letting them earn money

Assign chores around the house so they can associate task completion with wages earned.

Opening a bank account

Teach the importance of saving by opening an interest-bearing savings bank account where they can deposit money they've earned.

Making learning fun

Play financially focused games, such as Monopoly, Game of Life, and Sims, that involve making important and strategic decisions.

  • Playing games can be a great way to explain the concept of risk and reward, which can lead to conversations about the stock market.

Setting a good example

Share your personal strengths, such as frugal shopping, couponing, or meeting your family's saving goals.

  • Show them the rewards of saving by going on a family vacation or buying a car.

Middle School:

Incorporate Daily Involvement

Ages 10—14 are a great time to involve your kids in real-life financial decision-making scenarios. Emphasize rules of thumb and day-to-day habits for saving, spending, and shopping through:


Make shopping lists together to show the importance and eciency of pre-planning and not buying frivolous things.

Financial maturity

Teach your kids the difference between financial wants and needs so they start to understand how to prioritize money and learn to save for the future.


Help them build budgets for meals, events, and other extracurricular activities. This shows them how planning ensures they'll have money for the things they want and need.

Bargain shopping

Compare the prices of different products and brands, and actively find the best deals. Use:

  • Honey: A browser extension that automatically finds and applies coupon codes at checkout on thousands of sites
  • Groupon: An online service that offers local deals and goods at a large discount

The average financial literacy test score, among kids ages 10—14

High School:

Build Credit Knowledge and Begin Investing

As they begin to manage their own money, high schoolers can build credit, and start investing in the stock market. Help them understand the ins and outs of moving into this next stage of life through:

First-hand experience

Add your teenager as an authorized user on one of your credit cards. Just be sure to teach them about responsible spending. And remember, as the main account holder, you are ultimately responsible for anything they spend.

Credit card comparisons

Show them how to compare different credit card features, costs, and finance charges.

  • Help them learn the types of cards that exist and how to understand the differences.
  • Explain the benefits credit cards can offer and the importance of paying off, or keeping balances low.
  • Introduce the costs of owning a credit card, such as Annual Percentage Rate (APR), interest rates, and annual fees.

Credit knowledge

Once they've established credit, show them how to check their credit report and what to look for.

  • Teach them to check their credit reports regularly, what is included (e.g. personal information, accounts, inquiries), and how that information can impact your credit scores.
  • Be transparent. Show them your personal credit report so they can see how past behaviors can have a positive or negative impact.

Identity protection

Now is the perfect time to help your child understand how to protect their personal information.

  • Teach them to guard their personal information and not give out details to those who ask without confirming why the information is used and how it is stored. Identity theives can use personal information to commit fraud or theft.

Planning for college

Talk through your child's plans for the future and how they can achieve their goals by looking at the various options available to pay for college.

  • Go over the difference between federal loans, such as Stafford and Perkins Loans, and private loans.
  • Teach them how to pay off their student loan debt eectively and strategically through smart choices, such as using auto-pay for bills.
  • Educate your children on the importance of applying for and actively seeking out scholarships.
  • Explain that part-time employment and saving to pay for college are both viable options.


The average student loan balance, as of 2017

As your kids mature, so should their understanding of personal finance. Incorporate these tips as they grow to nurture your children into financially independent and savvy adults.

SOURCES: "Financial Illiteracy Costs: Over 3,000 People Estimate How Much," 2017, National Financial Educators Council; "Survey of the States," 2016, Council for Economic Education; "National Financial Literacy Test," 2017, National Financial Educators Council; "Here's Everything You Need to Know About Consolidating Your Student Loans," 2017, Experian

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