Simple Ways to Promote Financial Literacy in Children

Parents, we believe one of the best gifts you can give your children is financial literacy. Just like investing, the key is to start early and allow the wisdom you share to compound. Children who are exposed to real-life lessons on saving, budgeting, credit, and investing grow into financially savvy and responsible adults. Here are simple ways to start educating your children about finances.

Lead by example and talk about what you do. Everyday financial behaviors contain teachable moments, but most people may not be in the habit of communicating those behaviors with their children. Whether you are paying bills, automatically transferring money into savings, saving for education, or meeting with an advisor, show your children what you are doing, tell them why you are doing it, and ask open-ended questions to gauge their understanding. Over time, they may come to you with questions, which is a great sign that their financial literacy might be increasing.

Be transparent about goals and encourage goal setting. Vacations, new cars, and special gifts do not buy themselves. Explain how you save for things. Showing them the time and discipline it takes to achieve financial goals can help them better understand the value of money. Also, encourage them to set a goal of their own.

Teach them how to budget. Kids need to understand the importance of living within your means. Start small with a trip to the grocery store. Show them your budget and ask them to help make a list without overspending. Talk to them about debt and how overspending can be a slippery slope.

Educate them on the importance of good credit. This is important, especially for older children. Credit card companies camp out on college campuses. Do not let your fledgling leave the nest without some serious education around credit cards, interest rates, and how a credit score will affect many things in life.

Reinforce the importance of compound interest. Your children are most likely not contemplating their ideal retirement age when they are 16 years old. What they might be thinking about is all the things they want to do, see, and buy. Show them the value of time being on their side and how it can create the financial freedom to live the lives they want.

Model charitable giving. Think back to when you were a child. Did you have a phase where you were passionate about saving endangered wildlife? Maybe you are still passionate about saving endangered wildlife today. The point is, that most children and adults have causes they care about. If you give charitably, discuss it with your children. Show how money is a tool of support and empowerment.

Instilling financial literacy in children is not just about teaching them to manage money—it’s about building a foundation of trust and understanding. When children learn from an early age about finances, they develop not only the skills needed to navigate the financial world but also the confidence to make informed decisions. This early education can create a deep-seated trust, making it likely that they may turn to you for guidance as they transition into adulthood.