5 Reasons Why Financial Literacy Is Important for Kids

Children are also taught to be independent and self-sufficient. However, while they are in school, they are not being taught about financial literacy.

A survey by the Milken Institute revealed that only 57% of Americans are financially literate. Also, according to the 2018 Assessment, among the 15-year-old students, 22% of them have a basic level of financial literacy and only 16% of them got a proficient level of financial literacy. This means that 78% of them have no idea about financial literacy at all and less than one in six American students really understands how to manage their money.

So if your child is not learning how to manage their money and they are not learning to make good financial decisions, they are more likely to forget about saving, get into debt, and make poor choices that will negatively impact their financial future.

What Is Financial Literacy

Financial literacy is a way for individuals to understand various aspects of personal finance. This includes budgeting, saving, credit, taxes and retirement. It doesn't just mean handling money. But it also means understanding how the financial system works.

The key to financial literacy is to understand what you are taking on and then make realistic plans based on your abilities, needs and priorities. Therefore, financial literacy is a way to guide your children from their early years and make them understand the importance of managing their money and their finances.

Financial Literacy is Important

Here are some of the other reasons why your child can benefit from being financially literate.

1. Encourages to Make Informed Financial Decisions

One of the reasons why financial literacy is important is because it helps your child to make informed financial decisions. Financial literacy provides you with the knowledge and skills to make sound financial decisions.

This is important because your children will have to make their own financial decisions one day. As a parent, you may provide guidance and support, but your children will need to make those decisions on their own.

2. Helps Achieve Their Goals

Financial literacy is important because it can help your child achieve their goals. The more knowledgeable and knowledgeable your child is about financial matters, the better placed they will be to reach their goals.

For example, you may want your child to be able to buy a house or car one day. If your child is not financially literate, they may struggle to get that car or house. Therefore, it is important to get them to learn about personal finance.

3. Helps Understand the World Around Them

Another reason why financial literacy is important is that it helps your child to understand the world around him or her.

If your child is not able to understand how the financial system works, there is a chance that they will struggle in life. The more knowledge and understanding your child has about money, the better position they will be in to anticipate changes in the economy and society.

4. Helps Build Their Wealth

Financial literacy can help you, children, to build wealth. They can do this when they invest their money the right way. They may also build wealth through their retirement savings and by following a budget.

For example, if your children are not financially literate, they may be in the habit of spending all of their money on unnecessary items that they cannot afford. However, if your child is financially literate, they may try to be more responsible with their money and save for a rainy day. 

5. Allows to Build Good Habits

Another reason why financial literacy is important is that it can help your child to build good habits. For example, your child may build a good habit of saving if they are financially literate.

Also, financial literacy can help your child to develop good spending patterns. They may learn how to budget their money and how to save for the future. They may even learn how to pay their taxes, which is something people don't think about until they are adults and have to do it themselves.


Teaching your children to be financially literate is important. With more personal finance knowledge your children can take more control of their own finances, which will lead to better financial decisions and improved personal finance management.

Kiddie Kredit is an app about money management for kids that helps them learn how to manage their money and get them to save for their future. It also provides tools to help educate children to develop a healthy financial mindset and best-saving habits. Let us help your children to be financially literate and make smart money management choices. Download our app today!

John D Saunders

John D. Saunders is a Web Designer and Founder at 5Four Digital, CMO at Kiddie Kredit and an Automation Expert with a decade of experience building brands online. He's worked with clients including Audi, NAACP and Apps Without Code.