Financial literacy is so important for kids to know.
54% of parents rated their teenager's knowledge of money management as either "good" or "excellent," but 78% percent of the children of those respondents rated their own knowledge of money management as merely average or even poor.
And only 26% of 13-21 year olds surveyed said that their parents taught them how to manage money.
I’ll be honest, my financial literacy tapped out around middle school. My parents and grandparents did a good job of teaching me to save money, give money in a generous way, and work to earn money.
But beyond that, I didn’t learn the intricacies of money that are so important to know.
That is until I met my husband who is well-versed in financial literacy partly due to learning from his own mistakes.
Thanks to him we have taken Dave Ramsey’s Financial Peace University class, listened to the Ramsey Show Podcast on every road trip, and started financial couples counseling.
Now, my goal is to make sure my high school students, especially students of color, and my own son are learning about important financial literacy topics.
And most importantly, teaching them to pass this knowledge on to their own children and friends, so they are building a legacy of wealth and financial literacy.
In today’s blog, I have 15 important topics to teach kids about financial literacy at every age and stage.
Lauren Barrett Writes is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program. As an Amazon Associate, I earn from qualifying purchases. Read more about these links in my disclosure policy.
Table of Contents
Download the chart here
15 Important Topics to Teach Kids About Financial Literacy at Every Age and Stage
Toddler Years: Ages 2-3
# 1 What is Money
At this age, teach your toddler what money actually is by identifying the names of dollars and coins (one dollar bill, five dollar bill, ten dollar bill, penny, nickel, dime, quarter).
This is a good age to get a pretend cash register and play store or restaurant. Have your kids give you items or make you food from their pretend kitchen. In return, give them money.
# 2 Wants and Needs
At the toddler stage, 2-3 year olds can start to learn what they need to live vs. what they want to have.
As a parent, you can gather some belongings (food, clothes, toy cars, toy house, legos, etc) and sort those things into two piles: wants and needs.
When you take your kids to the store, you can discuss whether what you are buying is a want or need.
This is the financial literacy they need in order to make smart buying decisions as they grow up.
# 3 How Money Works
To expand upon #2, teach your toddlers that your wants and needs cost money.
Take them to the store with you and show them the price tag for an item. Explain that this tells you how much something costs and how you have to pay for it before leaving the store.
With the cash register at home, set up a restaurant and store. Make a menu with how much an item costs or a store with price tags on various toys.
Model examples of when you have enough money, you can buy something and when you don’t have enough, you can’t buy it.
Preschool Years: Ages 3-5
# 4 How to Earn Money
Kids ages 3-5 can start to learn ways to earn money.
Talk to them about how when you go to work, you earn money.
When you sell old toys and clothes, you can earn money.
When you do extra chores around the house, you can earn money or an allowance.
When you start a business, like a lemonade stand, you can earn money.
When you provide a service for someone else, like raking leaves, you can earn money.
# 5 Saving vs. Spending vs. Giving
The 3 jar system is a good way to teach your preschoolers about the three ways you can handle money.
The money they earn or are given can either go into three categories: save, spend, give.
Help your kids learn that some money they should save for something big. Some money they can spend right away for something small. And some money they should give to help others.
# 6 Online Banking/Shopping
In a digital world, a majority of people are buying things online and using credit or debit cards or apps where you can exchange money (PayPal, Venmo, Apple Pay, Cash App).
With this new technology, it is easy to spend money recklessly because you have nothing tangible to see decrease.
This can be hard for little kids. That is why we hear so many stories of kids aimlessly racking up hundreds of dollars on their parents’ Amazon accounts.
Once preschoolers have an idea of what money is and how it works, start the discussion of online banking and shopping.
Some accounts on your phone and computer are set up to a credit or debit card and money goes away when you buy something.
It might even be a good time to introduce key words like: decrease, increase, greater than, and less than.
You can even show them on a number line that when you buy something online or swipe a card, the money you have decreases.
When you earn money through work, the money you have in your bank increases.
Elementary Years: Ages 5-10
# 7 Adding/Subtracting/Multiplying/Dividing Money
In the elementary years, schools will work on these basic math skills with kids, but you can reinforce this skill at home.
Work on buying multiple items from the pretend store or restaurant. Kids will have to practice adding money in that way.
# 8 Making a Profit
Learning that how much you spend should be less than how much you earn is called a profit is very valuable. The elementary years are a time to learn that.
The best way to teach this is for experience.
Growing up, we practiced this a lot through the lemonade stands and carnivals we did in the summer and the pose with a large pumpkin and makeshift hayride we hosted at our house during the fall.
These events were good learning opportunities.
Other experiences you can do with your kid to learn about a profit:
Calculated how much you spent with your kids to get everything set up and then how much money you made. Subtract the difference. That is the profit.
Remember to teach your kids that your time is worth money too. Although you might have made a profit, was it worth it for the amount of time and work you put into it?
That’s important for kids to learn to enhance their financial literacy skills.
# 9 Comparison Shopping
Discounts. Sales. Thrift shops. Deals. Shopping around.
Teach your kids to research before you make a purchase, especially a larger one.
Include them in on a purchase you want to make for a household. Show them how you Google the product and compare prices from different websites or stores.
Make sure you point out that something might be cheaper, but the overall quality is poor compared to something more expensive.
Middle School Years: Ages 11-14
# 10 Creating a Budget
Around the middle school years, kids should actively create a budget or participate in one at home.
Kids should learn the difference between fixed and variable costs within a budget.
Have your tweens record things bought into the budget after an outing to the grocery store.
We use the EveryDollar App for our budget.
# 11 Credit Cards vs. Debit Cards vs. Cash
By this age, kids ages 11-14, probably already know what a credit card and a debit card is. But if they don’t, now is the time to teach them.
However, what is more important is to know the pros and cons of using each of these forms of payment.
Bring up what interest is when related to credit cards.
Then, allow your middle schoolers to come to their own conclusion with each.
Ask prompting questions like why might you prefer debit cards and cash over credit cards? What are some rules to remember if you ever use a credit card?
One of the critical elements to financial literacy is allowing kids to have the ability to think and infer when it comes to money instead of being passive users and spenders.
# 12 Saving for College
Going into debt for college has become the norm and acceptable, but it doesn’t have to be.
Starting the discussion around saving for college should start early and be discussed often. The middle school years are the time for that.
At this age, kids can learn about 529 plans, scholarships, work study, grants, and the dangers of taking out too many loans.
They can start exploring the cost of college and the difference between in-state tuition, out-of-state tuition, and community college tuition.
They don’t need to have a major and where they want to go to college decided at this age.
They just need to know the cost of college, how to save for it, and why they don’t want to graduate with mounds of debt.
High School Years: Ages 14-18
# 13 Taxes and Insurance
Teenagers need to have financial literacy in this area, but most don't. I know I didn’t at that age.
Here’s what they need to learn.
And the best way for them to learn is to be actively involved in the finances at home and engaged with open and honest conversations with the family.
# 14 How to Save and Invest
Teenagers are not too young to save and invest for the future, even retirement.
Here’s what they need to learn:
Financial Peace University could be a good gift to give your highschooler to learn this important financial information.
# 15 Buying a Car Vs. Leasing and Buying a House Vs. Renting
Teenagers need to learn the pros and cons of each of these actions.
Again, this is a conversation to have with them or an area that will be covered in Financial Peace University.
Wrapping It Up
Money doesn’t have to be such a taboo and daunting subject that we avoid discussing with our kids of all ages.
It should be something that we start teaching our kids early and building upon at every age and stage.
Although there is a lot to learn when it comes to money, these fifteen important topics are the building blocks to having a well-abled, thoughtful, generous consumer as a child who has rich knowledge of financial literacy.
And financial literacy is so important…
“My hope is that with increased financial capability, more of us will be able to transition from surviving to thriving. Resulting in sufficient resources to support our own ever-changing, highly subjective pursuit of ‘happiness’.”
-Travis Cook, Education Specialist, Utah State Board of Education