Financial Literacy for Kids in 3 Simple Lessons

Editor’s note: This post is sponsored by First Command Financial Services, focused on teaching financial literacy to children. 

As parents, one of the most important things we can do for our children is to build financial literacy. After all, if we’re not careful, time can slip away and our children will enter adulthood with no experience managing their own finances.

Use the following lessons as a guide for teaching your children basic financial principles that will help them as they grow into adulthood:

Lesson 1: Earning Money 

Identify age-appropriate opportunities for your children to earn their own money. For teenagers, this may involve entrepreneurial efforts around the neighborhood, like mowing yards, dog walking, or babysitting. Or it could involve finding part-time employment on base, like bagging groceries at the commissary, serving fast food, or lifeguarding at the pool. 

For younger children, you can start by rewarding them for positive things they already do or things you want to encourage them to do, such as helping out with chores around the house, getting good grades, or practicing a sport or instrument. 

Lesson 2: Saving and Budgeting

Once your children understand the importance of earning money, it’s time to teach them the basics of budgeting and saving. With your guidance, even young children can benefit from the following strategies.

• Open a savings account and help them decide what percentage of their earnings they should save. 
• Help them plan a spending budget for the rest of their monthly income.
• Suggest general spending categories, such as “shopping,” “hanging out with friends,” or “favorite snacks” based on their actual interests. 

These steps will help them see a budget as an organizational tool, instead of something that keeps them from doing what they enjoy.

Lesson 3: Introducing Long-Term Financial Goals

Help your children embrace the concept of planning and investing for longer-term goals. If possible, start by offering to match the money they save if they agree to keep the money in savings for a certain amount of time. That way, they can experience firsthand how compound interest works and learn how to make their money work for them. And it will give them a great way to save for big purchases they really want, such as a new gaming system or even a car.

Building financial literacy for your kids can be challenging, but with the right approach and the right attitude, your children can learn to make smart financial decisions throughout their lives. And it can give you the peace of mind that comes from knowing that your children will be prepared to enter adulthood with a solid foundation of financial knowledge. 

We pride ourselves on our commitment to working with military families, regardless of circumstances or net worth. In fact, we stake the First Command reputation on it. To learn more, speak with a First Command Financial Advisor near you.