Last Updated on March 8, 2023
Financial literacy is one of the most important things kids should learn early.
However, some parents worry that talking about money might bore their children, or their kids will find the topic too complicated. Some parents may simply not know where to start.
Nevertheless, the habit of saving is vital and must be established at a young age. So, whether they find it exciting or challenging should not be an issue for parents. They need to start teaching their kids how to properly spend money at the earliest possible time.
Helping form money habits for kids and teens at an early age is one of the ideal ways parents can teach them about budget or budgeting, setting financial goals, and saving.
It allows parents to teach their young ones the practice of delayed gratification – an important skill that encourages positive behaviors, such as giving and sharing.
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What Can You Do as a Parent?
Teaching your kids the proper way of utilizing money allows children to understand the value of money, an integral part of our daily lives.
Money is needed for food, clothes, education, healthcare, insurance, utility bills, vacations, and other essential transactions and activities.
Children do not pay the bills yet or do the grocery shopping, but parents can train them to do activities that involve money.
Here are a few ways to do this.
4 Steps to Financial Literacy for Kids
Educate Yourself and Your Children
Of course, knowledge is power, and for a child to understand exactly how money works is key. It is also important to teach kids about earning their own money.
A full overview at an age-appropriate level is the best starting point. It is also important to continue to educate yourself.
There are plenty of resources online so utilize them as much as possible, find the ones with the most empowering and informative messages. Sit with your child to study these resources and allow your child to ask questions.
Learn About Saving & Investing
When it comes to earning money, it’s a great idea to encourage your children to save up for something special, getting into the habit of saving towards a goal is an incredibly valuable lesson.
It also comes with a great sense of achievement for the children and will set them up for life if they can learn to be patient and reach their goals.
This is an excellent gift for a child as it will teach them to value money and start them on the road to being great at money management.
Here are a few ways you can help your child start earning, saving, and investing money.
- Use an online chore system or app that allows you to assign chores to your child and monitor their progress. Reward your child with a “salary” for every completed chore.
- Schedule a payday when your kid’s completed weekly chores get paid. Open a bank account for your child and transfer their salary from your account to theirs.
- Have your kids set aside some money for investing, and let them buy shares of certain stocks.

Discuss Budgeting
Teaching a child how to write up a little budget for themselves is easy, it’s as simple as giving them a certain amount of money per week and seeing if they can make it last until the next ‘payday’.
You can set this up using a digital savings app or on paper, but whichever way you do it try turning it into a little game or challenge for them.
Maybe the person that sticks to the budget the closest in the family wins a small prize?
So many people struggle daily with a budget because it isn’t taught in schools and many parents aren’t sure when it comes to sticking to a budget either, so learning this new skill together is going to help everyone.
Lead By Example
This is a big one because we are the most significant teachers we’ll ever get for our children at the end of the day.
There’s no way you can expect your children to be good with money if you’re making bad decisions left, right and center.
Share your wins with the children, and explain to them what exactly it is that is going well.
Talk to them about the things that aren’t so great about money management, and how you can learn from them.
It sounds intense, but depending on the child’s age, many of your experiences can be teachable lessons for the both of you.
In addition to this, letting them see you work can demonstrate the concept of work ethic which is a win-win situation.
If you are currently struggling with money, it’s worth working on your own budget and savings, allowing the children to see what that means and how quickly it can gather momentum.
Other activities you can teach your kid include donating money using their rewards or salary, saving for and buying a toy or whatever item they want and investing their money in real stock.
Final Words
To give you more detailed ideas on how you can help your kids learn to spend money wisely, check out the infographic below.
Ultimately, there’s nothing more inspiring to our children than to see us learn something new and include them in it.
Managing your own finances can really be a great start to encouraging financial literacy in your children so they can care for themselves one day!
It’s also sometimes a learning curve for the whole family to join in on, and even the most reluctant person can be a money-management pro after some practice!
What are some steps you are taking to improve financial literacy for the kids and yourself? Feel free to share in the comments!