Financial literacy for kids and students

Raising financially savvy children is a lengthy process, so it's best to start when the kids are young. Children need guidance from budgets to credit scores to understand a dollar's value. Parents are responsible for helping kids understand fiscal responsibility.

Not every concept related to money is simple for kids to understand, and much of it depends on the child's age. For example, owing interest on money borrowed may be difficult for a middle schooler to understand, while learning where the money comes from to buy an item may not make sense to a preschooler. Luckily, there are many resources available to help adults explain how money works to kids, especially given the many technological developments made in the past two decades.

Technology offers parents and educators access to financial literacy toolkits like never before, with websites, apps and other tools developed to lead children toward financial success.

Start with the basics of earning, saving, investing, spending and borrowing.

Let's consider these key components:

• Earning: How do you put more money in your pocket? This is a question everybody ponders at some point in their lives and is the foundation of earning. Teach children about the different ways to "earn" money, such as jobs, chores, careers and investing.
• Saving: An excellent way to teach saving is with a goal in mind. Teach children how to withhold a portion of their income to reach that goal. This could be buying a video game or even going to college. Goals can be adjusted according to the child's age, priorities and needs.
• Investing: How do I use money to make more money? This is pretty much the core concept of investing. Children can be taught how investments work gradually, starting with savings accounts and leading up to stocks or other more challenging concepts. Checking with your financial advisor about investing is always a good idea.
• Spending: Spending is perhaps a child's favorite aspect of money, while accountability and budgeting may be their least favorite. It's a good idea to teach these concepts in tandem. Help children learn how to calculate a realistic budget with their earnings in mind.
• Borrowing: The concept of borrowing can be taught to kids through small loans. Children must learn that loans aren't just free money and need to be repaid. Talk to them about credit cards, interest and debt too.

Why is it important for children to be financially literate?

Financially literate children tend to grow up to be financially literate adults. This is why it is so crucial for children to understand how money works. Early exposure to proper money management skills sets them down a path of knowledge and success.

The benefits of using technology to teach personal finance

Traditional methods of learning about money may seem outdated to the next generation. Children of all ages are growing up in a technological era in which access to digital platforms has never been so abundant. Everything from the internet to social media is a part of their everyday life.

Parents and educators can take advantage of this opportunity to explore new teaching methods. From simple counting to loans and credit cards, there's no lack of options for financial literacy tools available online.

What's more, gamification inspires motivation. Children of all ages are less likely to be bored by technology's new, stimulating learning methods and more likely to retain what they're learning.

With a basic understanding of money, elementary school-aged children may want more. Parents and educators can help them learn the way of the world by teaching them how to save and budget. Both are vital skills they need now and as they become adults.

Saving money

Although elementary school children probably won't need to be saving money, you can begin orienting them to the concept of saving at this age. There are plenty of applicable lessons from saving that aren't just money-related. Teach these lessons with things like food. If their favorite food is ice cream, buy them a pint and teach them how to savor it, so it's not all gone at once.

Budgeting and need vs. want

Children at this age don't need a fiscal budget, but it is an excellent time to familiarize them with the concept. Creating a budget goes beyond just managing your money. This skill can come in handy for budgeting time and resources too.

You can teach budgeting alongside opportunity cost. Even if you don't use the term "opportunity cost," this is another concept children at this age should learn. Teach them the difference between impulse buying versus long-term goals — or needs versus wants. Help them with prioritization and show them conscientious shopping.

Middle school is when money becomes a little more tangible in a child's life. Some children this age may take on gigs such as mowing the lawn or delivering newspapers. Many middle-school kids also earn an allowance. Parents can help their preteens visualize a smart money plan with the right tools and tech.

Comparison shopping

By middle school, lots of children understand needs versus wants. So, a good subject to teach them next is comparison shopping. Teach them comparison shopping using items they're familiar with, such as school supplies.

For instance, they know they need notebooks and pens to complete their education. Help them look at the size and price of these items. One week, look at the brand-name items, and the following week look at the generic version. Discuss differences and decide together which is worth the cost.

Income

Middle school is the time in a child's life when they begin thinking about what they want to be when they grow up. Of course, they don't need to decide on a career at age 12, but it is the starting point for discovering how their unique skills and hobbies fit into this world. The time when kids are beginning to think about career paths presents the perfect opportunity for parents and educators to discuss income.

Different jobs and careers inevitably have different incomes. Talk to them about not only income but also responsibilities, paychecks, taxes and benefits. You may wish to introduce them to the concept of income by using allowance payments as an example.

Apps and tools

Below is a list of apps and tools suitable for middle schoolers:

• The Frugality Game: Perfect for middle schoolers, The Frugality Game teaches children how to record and manage their personal finances. Each level takes you to a new land and introduces a new financial responsibility.
• The Budget Game: The Budget Game is another interactive game teaching kids how to budget and why it's essential. Throughout the game, kids have bills to pay and expenses to budget.
• Saving the Day: Saving the Day helps kids discover their money personality type by giving them choices about how and when to spend their money.

By high school, children are young adults. They may get their first credit card, have their first job or even be looking for student loans. All of these matters can be tricky without a bit of guidance. It is up to parents and educators to guide them throughout all these decisions. What teens are learning now can shape their lives for years to come.

Help them achieve a good credit score, avoid predatory loans and learn how to file taxes at these ages.

Loans and debt

High schoolers have a lot to learn about loans. Since many high schoolers head off to college at this time in their lives, it is a perfect opportunity to discuss student loans. Parents and educators must teach them not only how to apply for them but also how to avoid predatory lenders. It is vital to offer them effective security tips for navigating online spending, loans or credit cards.

Learning about loans also comes with understanding debt. You can teach these subjects together naturally. Teach your teens about healthy borrowing habits, the different types of loans and the difference between good and bad debt. Make these subjects a reality for them by discussing how they will pay for college.

Credit scores and credit building

The teenage years are also perfect for learning about credit scores and building credit. Your teen may already know what a credit card is but not know exactly how it works. Teens attending college and entering the workforce must learn how to navigate credit.

Teach them what a good balance is, what they can afford to charge and how to pay off debt. Tie in conversations about interest charges, late payments and credit utilization ratios.

Apps and tools

Below is a list of apps and tools suitable for high schoolers:

• Scam Busters: Scam Busters follows Liam as he tries to help his family avoid being scammed. Perfect for high schoolers, this game introduces students to the world of predatory lending and fraudulent activity.
• Charge!: Charge! is a simulation tool that introduces teens to credit cards. The game explores interest rates and payment periods.
• Stock Market Game: The Stock Market Game is an online simulation of the global capital markets that prepares kids for financially independent futures.

Below is a list of general financial literacy resources for parents and educators:

• Family Money: Family Money offers financial literacy resources for kids (ages 8 and up) and parents. With a prepaid debit card, parents can help empower kids to learn responsibility, manage money and gain financial freedom. Try Family Money on us for 30 days*. See Trial Offer & Auto-Renew Terms.
• InCharge: InCharge offers online financial literacy resources for kids from preschool to second grade. Their resources contain lessons on making spending decisions, earning money and investing, among other important skills.
• Kid's Turn: Kid's Turn is a collaborative blog for parents about helping children learn, grow and play. You can use the blog for several purposes, including finding further financial literacy resources.
• CreditCards.com: CreditCards.com provides information for children and teens on basic financial literacy skills in preparation for their first credit card.
• Kuder: Kuder.com features links to several free financial literacy resources for parents and teachers. These resources are most suitable for grades K-12.

Government resources

Below is a list of government-specific resources for parents and educators:

• Federal Reserve Education: The U.S. Federal Reserve Education website provides resources for educators to help shape students into informed consumers. Educators can find virtual learning resources, order publications and their local Federal Reserve office through the website.
• National Credit Union Administration: The National Credit Union Administration's Financial Literacy and Education Resource Center provides resources, guidance, games and tools for parents and educators.
• USA.gov: USA.gov features an abundance of educational resources specifically geared towards teens and young adults navigating student loans and financial aid.
• U.S. Mint Coin Classroom: The U.S. Mint Coin Classroom features different games and activities designed to teach kids about U.S. coins. This website can serve as a valuable resource to both parents and educators.
• U.S. Mint Education Resources: The U.S. Mint website also features an array of educational resources, including at-home activities and teacher lesson plans.
• Consumer Financial Protection Bureau: The Consumer Financial Protection Bureau offers financial education resources for youths to help them develop financial knowledge and skills.
• U.S. Treasury: The U.S. Treasury offers a thorough list of financial education resources through its Office of Financial Education.