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Teaching Kids About Money: Financial Literacy for Families

In life’s journey, understanding the value of money and mastering the basics of financial management are indispensable skills. Yet, skills do not come naturally; they must be learned and nurtured from a young age. This underlines the importance of teaching kids about money.

“Financial literacy is a critical component of a well-rounded education, one that prepares children for the realities of the adult world,” says Martin Walcoe, President & CEO of David Lerner Associates, Inc. at David Lerner Associates, Inc. “We work with our clients to impart financial wisdom to the younger generation, offering parents and guardians practical tips and strategies for teaching kids about money.”

The State of Financial Literacy in the US

Did you know that millions of American children receive little to no financial education in school or at home?

Money can feel like a taboo topic in many households, and financial education is not part of the curriculum in most American schools. Recent research indicates that merely a third of kids remember being taught about money in educational settings, with an even smaller number gaining financial knowledge from family discussions.

This creates a significant void in their financial upbringing, especially given that a child’s financial behaviors are established by age seven.

The Foundation of Financial Literacy

According to a recent study conducted by OnePoll for BOK Financial, 38 percent of parents are concerned that their children do not comprehend the value of a dollar.

Postponing financial education until later years could prove to be detrimental.

This implies that parents and other adults might have to take the initiative to introduce children to fundamental concepts of money management.

However, teaching children about money goes beyond the mechanics of counting coins and bills. It involves instilling an appreciation for the value of money, understanding needs versus wants, and grasping the basics of saving, investing, and giving.

These lessons form the cornerstone of financial literacy, equipping children with the tools they need to make informed decisions in the future.

Strategies for Teaching Financial Literacy

So, what can parents do to help their kids understand money better?

  1. Start Early with Simple Concepts: Introduce young children to basic money concepts through everyday experiences, such as identifying coins, understanding what money can buy, and how much items cost.
  2. Use Allowances as Learning Tools: if you have the ability, allowances can be a powerful tool for teaching budgeting, saving, and responsible spending. Encourage children to allocate their allowance into savings, spending, and charity categories.
  3. Open a Savings Account: Saving is a critical financial habit to instill early on. Please help your child open a kids-friendly savings account to teach them about interest, banking, and the importance of saving for the future. Offer to match their savings up to a certain percentage—much like most companies when it comes to defined contribution retirement plans.
  4. Set Financial Goals: Work with your child to set achievable financial goals, such as saving for a new gadget or a charitable donation. This will teach your child the value of planning and delayed gratification.
  5. Educate on the Basics of Investing: For older children, introduce simple investment concepts, such as stocks and bonds, and explain how investing can help money grow over time.
  6. Lead by Example: Your kids learn a lot by observation, and as their parents, you remain the most critical example in their lives.
  7. Make Learning Fun: Use games, apps, and books to teach financial literacy engagingly. Many resources make learning about money fun and interactive.
  8. Encourage Entrepreneurial Endeavors: Support your child in starting a small business, like a lemonade stand. This can teach valuable lessons about profit, loss, and hard work.
  9. Discuss Financial Failures and Successes: Share appropriate examples of financial mistakes and successes from your life. This can help demystify money and show that financial management is a learned skill.

Incorporating Expert Advice

Engaging with educators, financial experts, and investment counselors can provide additional insights into teaching financial literacy. Workshops, seminars, and online resources tailored to children and teens can reinforce the concepts taught at home.

Many communities offer programs to enhance financial education, providing valuable support for parents and guardians.


Teaching kids about money is one of the most valuable lessons a parent or grandparent can pass on. It’s about laying a foundation for wise financial decisions to serve them throughout their lives.

Financial literacy for families is not just about teaching kids to manage money; it’s about setting them on a path to financial independence, security, and success.

Let’s empower the next generation with the knowledge and skills they need to navigate the financial challenges and opportunities of the future.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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