Financial Literacy for Kids: Lesson Ideas by Age Group

Being a parent means having a lot of complicated conversations, from religious beliefs to money and everything in between. Thankfully, there are some excellent resources for financial literacy for kids to help keep things age-appropriate and easy to understand.

What is basic financial literacy?

Basic financial literacy is the understanding of various economic ideas. The basics of finances are the concepts that kids need to learn to make intelligent financial decisions once they’re on their own. Some examples include:

• Managing a budget
• Planning for expenses as well as the unexpected
• Investing
• Saving for significant purchases or an emergency fund
• Learning to live within your means
• Being responsible with credit
• Understanding the terms of a loan

According toa recent survey by debt.com, almost 45% of parents avoid having money conversations until it’s too late, if at all. Moreover, very few schools teach financial literacy lessons to kids, and if they do, it’s minimal and doesn’t cover the information they truly need to thrive.

While it’s safe to say all parents want their kids to do better than they have done, not talking about finances can result in bad decisions that take years to clean up. Cosigning on a friend’s loan or opening too many credit cards are naive money management choices that will leave a black mark on their credit score for years.

And let’s face it – we’ve all made horrible decisions in our late teens and early twenties that we don’t want following us into our 30s, right? We don’t want that for our kids, so it’s essential to give them the information and tools they need to make wise choices – whether with money, friends, dating, or anything else.

How do I teach my child about personal finance?

Kids get the concept of money by the time they’re three and have solidified core money beliefs by the age of seven, so waiting until you’re ready will probably be too late. So, where and how do we start these conversations?

We start by teaching them basic financial literacy and build from there. The first step is to review which financial lessons your children need based on their age group. For example, what works for a six-year-old will vary wildly from what a 13-year-old needs to know.

Financial Literacy for Students vs. Kids

Both teachers and parents can use any of the ideas below to create a financial literacy curriculum with lesson plans. Whether they’re your children or your students, these guidelines can help you create a lesson plan framework.

Before we get started talking about age groups and skills for each, let’s talk about one of my favorite tools for teaching financial literacy to kids. The financial literacy activity pack from Smart Money Mamas is a great way to have fun while teaching positive lifelong lessons.

The package is for kids of a young age, and includes:

• 11 different activities for kids aged 3 to 13
• Financial literacy coloring sheets
• Adorable savings trackers to help your kids build healthy savings habits
• Explanations of learning objectives with each activity so you can help your kids get the most out of each and every lesson!

My kids love it and had had a ball coloring and learning how to count money – and then pulled out their piggy bank to count even more! My oldest is a stone-cold entrepreneur at heart (seriously, she charges me for coffee EVERY morning!), so she especially loved the kid’s business plan.

Don’t worry – if your kids are older than 13, I still have some great suggestions below on how to get them on the right financial track.

Next, Let’s start by talking about the type of information kids of each age group need to know:

Teaching Kids Money: Ages 2 – 7

These are the financial literacy skills kids of an early age should focus on learning:

• Counting and basic math skills
• Being comfortable with numbers
• Identifying coins and bills
• Learning about needs versus wants
• Being able to grasp the concept of spend, save, give

While some schools might teach a bit of financial literacy for kindergarten, it’s never too early to start. Here are some great ideas on making learning about money fun:

1. Play games. Find fun games that involve counting or play money. Learning about money under the guise of play can be a fun way to learn something they might be overwhelmed or confused about.
2. Teach while you shop. Take your child shopping and talk about how you decide what your budget is and set of priorities for the shopping trip. Show kids how discounts and how coupons work. Let them be in charge of adding up purchases as you shop.
3. Talk about needs versus wants. Teach them the difference between a need and a want.
4. Count and sort coins. Get young children used to handling small amounts of money and being comfortable counting it.

Tools to teach 2 to 7-year-olds

• The Financial Literacy Activity Pack by Smart Money Mamas
• Outschool classes for kids (Get $10 off when you book your first class today! Use code SUMMERADVENTURES10)

Teaching Kids Money: Ages 8 – 13

Older kids can start to learn more complex skills when it comes to personal finance. For example, they’re able to use more logic and reasoning and can learn important thing like:

• The importance of budgeting
• Sales tax
• Money terms
• How businesses work (profit, expenses, etc.)
• Saving up for a major purchase

At this age, they’re able to handle learning more than just the three principles of financial literacy. You can help them build their knowledge in new and different ways, such as:

1.  Pay kids an allowance. Pay kids for their work around the house so that they have their own money to spend. Try a program like Greenlight to help you keep track of chores and pay them accordingly. You can learn more about it by reading my Greenlight for Kids review.
2. Allow them to pick up work outside the house. I’m not talking about a job at Wendy’s, but encourage them to offer services in the neighborhood. Anything from dog walking to cleaning up dog poop to babysitting can be one of the best ways for them to learn responsibility and earn some extra cash. Click here to see more great ideas to make money as a kid.
3. Have honest conversations about money. Don’t scare the pants off of them, but if you can’t afford something, tell them it’s not in the budget. Teach them not to follow every whim, and that’s it’s ok to say no to spending money you don’t have. Learning to https://www.debtfreeforties.com/blog/living-below-your-means/live within your means is a great lesson for kids this age.
4. Teach them to save up for a big purchase. If kids want something bad enough, have them use a printable savings tracker like this one to teach them how to wait and save towards financial goals, rather than throw purchases on credit cards.
5. Have your kids help research purchases. Whether it’s a new gaming system or a family vacation, involve your kids in the research so that they can understand how to find deals and how to tell if they’re paying a reasonable price or getting raked over the coals.
6. Go in on big purchases together. If you’re buying something that benefits the family, like a new gaming system or season passes to your favorite hockey team’s home games, ask them to contribute a small percentage. Contributing to family purchases teaches kids that to share in the responsibility and not just the fun.
7. Decide if they can handle a debit card. We live in a world where everyone pays with plastic, so they need to understand how it works. Read more about how old you have to be to get a debit card. Or, learn how to design your own debit card on Cash App.

Tools to teach 8 to 13-year-olds

• The Financial Literacy Activity Pack by Smart Money Mamas
• Outschool classes for kids (Get $10 off when you book your first class today! Use code SUMMERADVENTURES10)
• Greenlight debit card for kids
• FamZoo debit card for kids

Financial Literacy for High School Students

Most high school kids end up getting a job, so the world of money becomes very real when they have to learn about taxes. Some of the critical information they need to understand includes:

• How to open a bank account (checking account or savings account)
• Emergency funds
• Investing
• Retirement funds
• How compound interest works
• How to file taxes

While things are more complex, you’ve got this. Plus, there are a ton of great resources to help you teach financial literacy for kids. You can help them build their knowledge in new and different ways, such as:

• Open a bank account in your child’s name. Help them open an account, set up direct deposit, and auto-transfers to a savings account every pay period, which can double as an emergency fund. Teach them about comparing types of accounts and figuring out which is best for them.
• Have them do the family’s budget. By allowing kids to handle the family budget, they get a real-life test run on how budgets work. Don’t forget to talk about budget categories and sinking funds and why you use the ones you do.
• Have them meal plan and grocery shop. An essential piece to understanding finances is planning and executing your strategy. What better way than to meal plan and grocery shop? This way, they can see how much things are, stick within a food budget, and get enough food to last the week.
• Play games to learn about compound interest. An entertaining and exciting way to teach compound interest is to play a “Would you rather?” scenario. In it, they have to pick if they’d rather have a penny that doubles each day for a month or a straight 1 million dollars. They’ll be surprised to see which one pays more! You can learn more about the math behind this here.
• Help them file their taxes. Luckily, their taxes are super easy if they’re working and don’t involve any heavy lifting. Explain what paperwork they need and how to file online.
• Open a ROTH IRA. Again, if they’re working, have them open a ROTH IRA or invest in their company’s 401k. Opening a retirement fund is another great opportunity for them to learn about the magic of compound interest!
• Talk about investing. Even as an adult, the idea of investing can feel daunting. It can be the perfect opportunity to learn together! Use a book like this one that’s geared towards young adults to get started.

Tools for high school students

• CIT Bank account
• Begin to Budget Bundle
• The best financial books for beginners
• Ideas for financial gifts for graduates
• Greenlight debit card for kids
• Turbo Tax or Credit Karma Tax
• Wonderium financial literacy classes

Financial Literacy Activities for College Students

At this point, they’re ready to fly the nest. You’re in the home stretch on teaching financial literacy for kids and helping them prepare for the real world. Make sure to talk about critical financial literacy items such as:

• Invest early and often. Review compound interest and how it grows when it’s had the most amount of time to build.
• Getting (and keeping) good credit. Talk about the most significant factors of credit scores, and how to check their credit report:
  • The amount of debt to credit available (credit to debt ratio)
  • Making timely payments
  • Having a variety of account types
  • Age of credit accounts
  • Number of credit inquiriesClick here to read more about why it’s essential to have a good credit score, and how to get one.

• Learn how to borrow money wisely. Talk about what happens when you don’t pay back loans in full, on time, and how that can cause a ripple effect across their lives.
• Discuss why it’s important to live below your means. Leaving below your means is about spending less than you make and putting some aside for emergencies, investing, and retirement. Click here for more talking points about living below your means.
• Figure out which types of insurance are essential. Show your kids how to figure out what insurance they need and make price comparisons to get the best deal.
• Responsible credit card usage. Discussing the importance of paying off credit cards every month is a big piece of the puzzle for avoiding drowning in debt.
• Teach them why leasing a car is a bad idea. Not sure yourself? Find out the top 10 reasons not to lease a car (I know from personal experience, unfortunately!).

Tools for college age kids

• Credit Karma or Credit Sesame
• Begin to Budget Bundle
• The best financial books for beginners
• Ideas for financial gifts for graduates
• Identity Guard for identity theft prevention
• Lemonade insurance
• Wonderium financial literacy classes

Now that you know what financial responsibilities each age group can handle, they’ll become a responsible adult when it comes to financial wellness. One of the best things you can do is have a little patience and let them make mistakes early, before it dings their credit and finances long term. Learning how to handle money at a young age is a great way to make a lasting impact on their lives.

Ready to learn more? Find out the best playroom ideas on a budget to help you save money when creating a fun space to play.