Kids Financial Literacy: Teaching Money Skills by Age
Financial literacy is a skill that must be taught—schools rarely cover it adequately. This guide breaks down what to teach at every age, with practical activities and conversations.
The stats are alarming: Only 57% of U.S. adults are financially literate, and most wished they had learned money management earlier. The good news? Financial literacy can be taught at any age, starting as young as 3.
Research shows: Kids who receive financial education make better money decisions as adults, have higher savings rates, and report less financial stress.
The 5 Money Principles Every Kid Should Learn
Earn
Money comes from work and value creation
- Connect allowance to chores (at least partially)
- Encourage entrepreneurial ideas
- Discuss how parents earn money
Save
Putting money aside for future goals
- Start with visible savings (clear jars)
- Set specific savings goals
- Celebrate reaching milestones
Spend
Using money wisely for needs and wants
- Distinguish needs from wants
- Compare prices before buying
- Use waiting periods for big purchases
Give
Sharing money to help others
- Let kids choose causes they care about
- Show impact of donations
- Model generosity yourself
Invest
Growing money over time
- Introduce compound interest early
- Use visual growth examples
- Consider custodial investment accounts
Money Lessons by Age
3-5 Years (Preschool)
Key Concepts:
Key Lesson: Money is finite—when it's gone, it's gone. Start with physical cash so they can see and touch it.
Activities:
Coin sorting games
Sort coins by size, color, and value
Pretend store play
Use play money to "buy" toys and practice transactions
Piggy bank saving
Physical piggy bank they can see fill up
Shopping helper
Let them hand money/card to cashier
Common Mistakes:
- Buying everything they ask for
- Not explaining where money comes from
6-8 Years (Early Elementary)
Key Concepts:
Key Lesson: Money is earned through work, and we make choices about how to use it.
Activities:
Save-Spend-Give jars
Divide money into three purposes
Goal setting
Save for a specific toy with a visual tracker
Chore earnings
Connect effort to money (commission-based)
Comparison shopping
Look at prices of similar items together
Common Mistakes:
- Giving money without connection to effort
- Rescuing them when they spend impulsively
9-12 Years (Upper Elementary)
Key Concepts:
Key Lesson: Money can grow over time, and planning ahead leads to better outcomes.
Activities:
Monthly budget
Track spending categories with allowance
Interest experiment
Pay interest on savings to demonstrate growth
Long-term goal saving
Save for something that takes 2-3+ months
Wants list waiting period
48-hour rule before buying wants
Common Mistakes:
- Not letting them make (and learn from) mistakes
- Only focusing on saving, never spending
13-15 Years (Middle School)
Key Concepts:
Key Lesson: Starting early matters—time is the greatest asset in building wealth.
Activities:
Part-time earning
Babysitting, lawn care, or other jobs
Compound interest calculator
Show how money grows over decades
Stock market basics
Paper trading or custodial account
Ad analysis
Discuss how marketing influences spending
Common Mistakes:
- Not discussing family finances appropriately
- Shielding them from financial realities
16-18 Years (High School)
Key Concepts:
Key Lesson: Financial decisions you make now (credit, debt, saving) follow you into adulthood.
Activities:
Own bank account
Checking and savings in their name
Credit card education
How credit works, why interest is dangerous
First job taxes
Explain paycheck deductions
College cost analysis
Compare schools, scholarships, student loans
Common Mistakes:
- Not preparing them for real financial responsibilities
- Co-signing without education
Money Conversation Starters
The best financial education happens in everyday moments. Here are natural opportunities to discuss money:
At the grocery store
"This cereal costs $5 and this one costs $3. What's the difference? Is the expensive one worth $2 more?"
When they want a toy
"How much does that cost? How many weeks of allowance would you need to save? Is it worth waiting for?"
Seeing an ad
"What is this ad trying to get you to do? How does it make you feel? Do you actually need this?"
After they earn money
"You earned $10 today! How do you want to split it between saving, spending, and giving?"
Making a family purchase
"We're buying a new TV. Here's how I'm comparing options and deciding what's worth the money."
When money is tight
"We're choosing not to eat out this week because we're saving for vacation. What would you choose?"
5 Common Parenting Mistakes
Never talking about money
Impact: Kids learn money is taboo or shameful
Fix: Have regular, age-appropriate money conversations
Giving money without context
Impact: Kids don't understand value or effort
Fix: Connect money to work, even if allowance is partially guaranteed
Rescuing from bad decisions
Impact: No natural consequences = no learning
Fix: Let them feel the pain of overspending (within reason)
Only emphasizing saving
Impact: Creates anxiety around spending or rebellion later
Fix: Balance saving with healthy spending and giving
Not modeling good behavior
Impact: Kids learn from what you do, not what you say
Fix: Be transparent about your own financial choices
Key Takeaways
- Start early—even 3-year-olds can learn basic money concepts
- Use real money experiences, not just lectures
- Let kids make mistakes with small amounts now
- Cover all 5 principles: Earn, Save, Spend, Give, Invest
- Model good financial behavior yourself
- Make it practical with apps like ChoreSplit to connect work and earning