Teaching Financial Literacy To Children–An Essential Guide

Is it too early to teach your children about finances? Absolutely not! The earlier, the better! 

In this essential guide, we’ll show you how you can teach your children financial literacy in different stages of their lives.

When They’re Toddlers

Kids start learning even at the moment when they’re born. Though, this type of learning is based on what they see their parents do like smile and say things. So, as they learn to pick up habits little by little, you can introduce them to a “store” setting. By playing store with toy groceries (i.e. veggies, fruits, etc.), you’ll be teaching them how to make buying decisions–what to buy, and what not to buy.

When They’re in Preschool or Kindergarten

Now, don’t panic if they don’t understand how money works yet. In this stage, you’re only teaching them the need to pay for things–that’s where you can take them on grocery trips. So, they can experience this concept (provided that you show them by using cash, instead of credit or debit cards).

Here, they’ll learn two things: counting (when seeing if you have enough dollars and change) and exchange (paying for things with money).

From First Grade to Fifth Grade

In this stage, you can teach them the concepts of earning and saving money. When kids learn about earning, you can introduce them to chores, which can be a great opportunity for them to earn money, instead of getting an allowance for doing nothing. In addition, kids can learn to save money by keeping a piggy bank or a money jar, as they earn more and more money over time. Now, when explaining earning and saving, give them many scenarios to think about. Plus, most banks and unions will let you create a savings account for children.

Plus, children will learn about opportunity costs, which shows them how just buying on impulse can affect long-term spending. In other words, you’re teaching them how to spend wisely–to determine the difference between their needs and wants.

From Sixth To Eighth Grade

Once your children get to middle school, here, they can learn about these three concepts: income, budgeting, and contentment. Let’s explore all 3:

  • Income:

It’s that common question that children are asked: “What do you want to be when you grow up?” While kids’ imaginations will run wild when they’re young, by the time they hit middle school, there’s going to be a real conversation on what careers that they truly want to pursue. So, be sure to help them explore different jobs, and what they can do moving forward. Also, you could take this time to talk about taxes, insurance, deductions from paychecks, etc.

  • Budgeting:

Here, you can ask your child to help you plan meals or grocery trips based on a set budget. This shows them how to budget their own purchases in the future.

  • Contentment:

While it’s tempting to compare yourself to others, don’t let that affect your child. Instead, show them how to be content with what they already have. In addition, they should understand the benefits of giving to charity by either making donations (i.e. money, clothes, etc.) and volunteering.

When They’re In High School

Now that your child is a teenager, it’s important for them to learn about independence. They’ll need to learn about having personal accounts, having credit cards, and how they can pay for college (if they choose to go to college). 

  • Personal accounts allow your teen to do the following:
    • Balance a checking account
    • Budget based on what they have in the bank, AND
    • Learn the difference between a savings and checking account
  • Credit cards can come with risks (i.e. high fees and interest charges). Therefore, it’s important to teach kids that credit cards should be used only in emergencies. Also, talk to them about how they can pay off the balance, whenever they use a credit card.
  • While some young people may skip going to college, others will want to further their education. Regardless of which route they take, it’s still important to talk about paying for college. Have them look at tuition, available scholarships, student loans, etc.


By teaching your children about finances now, you’re in some way preparing them for the future. As they learn from you, they can soon adapt good financial habits.

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