4 Methods for Teaching Young Children Financial Literacy

Why is financial literacy necessary for your children? Financial literacy assists youngsters in developing decision-making abilities.

It's easy to be swayed by advertising and marketing campaigns done by businesses to influence our buying decisions daily. Financial literacy helps children develop their critical thinking skills, making them less likely to fall for these marketing ploys.

Financial literacy also gives your kids a more realistic understanding of the cost of big-ticket items, like cars and houses. If they understand the concepts of money, they will also be less likely to develop debt problems.

Here are four methods for teaching young children financial literacy:

1. Use Cash to Demonstrate Expenditure

The easiest way to teach children about money is to help them understand that money is hard to come by. Using cash to pay for their purchases will allow them to realize that money doesn't grow on trees. 

One way to teach them this is by taking them on field trips to stores they want to visit. You can also encourage them to save their earnings and deposit their money in a savings account.

2. Teach Children to Be Careful with Money

Many children don't understand that money doesn't simply grow on trees. You can explain to them that their money has to be earned, and one way to do this is to teach them how to be careful with it.

Teach them to be careful with their money by encouraging them to be prudent. You don't want your kids to be too careless with their money. Remind them to be cautious with their money. Explain that there are expenses that they will have to incur in their lifetime.

Consequently, you may have to spend a lot of money on food, rent, and other bills. Therefore, encourage children to save money instead of spending it on toys, gadgets, and presents.

3. Teach Children the Advantages of Saving and Investing

Another way to teach children financial literacy is to show them the importance of saving and investing. If your kids are too young, you can guide them through your savings and investment habits.

Maybe you can share with them how their piggy bank helped you save up for their education or the down payment for your home.

4. Talk to Children About Credit

Children need to become familiar with credit cards. They should know about the pros and cons of using credit cards. 

You can teach them about credit cards by comparing them to ballpoint pens. Both credit cards and ballpoint pens come with their pros and cons. However, ballpoint pens can be disposed of - they have no value.


Children acquire their financial literacy through the information that they get from others. As a parent or guardian, you are the first person your child will listen to.

Financial literacy is a skill that can be acquired. It is not something that your child can learn from their classmates. You need to take the initiative and teach your child about financial literacy.

Finally, remember that teaching young children financial literacy doesn't always require complicated explanations. Using cash, teaching children to be careful with their money, and teaching them to save and invest are great ways to help them become financially literate.

If you're having a hard time with financial education for your kids, then worry no more because Kiddie Kredit has got you covered! It is a mobile app designed to educate children on the credit system by completing chores. Download yours now!

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.