The Importance of Teaching Your Children About Financial Literacy

Financial literacy is often an intimidating concept for many adults, so you may think that it’s much too early to teach your children about it. However, children start developing financial habits once they reach seven years old, and other skills they learn can contribute to how they approach money. Since they’re growing up in a remarkably digital environment, they have access to countless online apps and resources to familiarize themselves with the prospect of money and what it means to earn, spend, and save.

If you’ve found yourself struggling to budget at some point, you’ll likely have wished that you learned how to manage your money better at an earlier age. For you to ensure a better future for your children, it’s best to prepare them early by focusing on their financial education. That way, you’ll end up raising money-smart kids who can thrive in any situation.

Here’s what you need to know about the importance of financial literacy in children:

Financial Literacy Helps Them Become Financially Capable

Learning how money works is the key to financial literacy, essential for developing proper financial habits and capabilities. It’s important to note that financial literacy is the first step to becoming wise with money and enjoying financial stability. It will teach your child the difference between knowing how to save money and when to spend it.

For instance, if your child understands that it is financially unwise to eat out for dinner every day despite being capable of doing so, they’ll eventually realize that such restraint is what allows the financial capability to be possible in the first place. It will guide them in their decision-making later in life, particularly when money is involved.

Literacy Teaches Them Discipline

Another reason to teach your children financial literacy is that it stresses the importance of making an informed decision and that they must live with the consequences of their actions, whether good or bad. Once they experience the effects of saving money, losing it, or spending it on something they ended up regretting, they’ll start to form attitudes and habits that will encourage them to make more disciplined, deliberate decisions. They’ll be less inclined to be reckless with their money or actions, helping them set up for success.

Tips for Introducing Financial Literacy to Your Child

The fundamental concepts of money and its value is something that children as young as three years old can learn, as they more vocally exhibit their curiosity at this age. You can start demonstrating this concept by using their toys as an example; if they want to have an extra helping of dessert, they’ll need to exchange one of their playthings. When they get older, it helps to be more transparent about home finances and explain the financial decisions you make to provide for them. They’ll begin to understand the relationship between the two.

You can also demonstrate the value of money by giving them a piggy bank, which will be a great way to teach them about saving. When you take them with you to the store, you can use cash to pay for your purchases instead, which will illustrate the actual link between spending and paper money. You can also introduce them to your spreadsheet of household expenses, helping them understand what it takes to support your family.


Teaching your children the importance of financial literacy will pay off as they get older since they’ll learn how to evaluate the value of money and the consequences—both good and bad—of spending and saving it. The more they know about financial literacy at an earlier age, the more confident they will be when they grow up, helping them feel motivated enough to pursue their goals and make them happen.

If you’re looking for money apps for kids, be sure to check out Kiddie Kredit! It is designed to teach children about the value of money and the credit system through completing chores. With the goal of building a financially free future for all, our app comes with simple to use features that will help your child become financially savvy. Download the 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.