Financial Literacy for Kids

Words by
Jackie Baucom

SEP 12, 2023

Financial Literacy for Kids

At some point, many of us have found ourselves wondering why our education didn’t equip us with the financial knowledge and skills necessary for adulthood. 

Schools rarely taught us about budgets, credit scores, investing, taxes, or debt. Instead, we memorized the quadratic formula (to the tune of “Pop Goes the Weasel,” if you had that one fun teacher), learned the parts of a cell, and dropped eggs from different heights. And while those were important lessons, sometimes we wonder why we didn’t also get an education on topics that would help us handle more everyday aspects of adulthood.

Thankfully, there are several free financial courses to help adults learn how to financially thrive. 

On average, Americans spend seven hours per week dealing with personal finance issues, three of which are at work. People with low financial literacy spend double that amount.

—Annamaria Lusardi, Professor of Economics and Accountancy at the George Washington University School of Business.

Today, some school districts have implemented financial literacy programs and have seen increased credit scores and lowered default rates in their students.

Finance in a Digital World

As parents, we can teach these important life skills at home and make sure our children are set up for a secure and successful future—particularly when it comes to the interplay between money and technology.

According to a 2022 Pew Research study, “In less than a decade, the share of Americans who go “cashless” in a typical week has increased by double digits.” About 4 in 10 Americans report not using cash at all in a typical week.

As digital tools (more on this below) get better and more secure, we can only expect the trend to continue. Digital finance may be the only kind of finance our kids end up knowing.

little boy writing in notebook with stacks of coins

Start Early

Anyone who has struggled with spending and budgeting can attest to the difficulty of changing those habits once in place. 

Teaching kids these skills early is easier than trying to correct them in the future. But don’t worry, it’s never too late to learn—it will just take a little more work and discipline. 

As soon as kids start to understand the concept of money, we can start teaching them about its value and how it’s used. 

For example, you might start by involving children in minor financial decision-making situations, like giving them a price range and letting them select the bread during a grocery store visit. 

little boy at lemonade stand

Allow children to earn money through chores or other age-appropriate tasks. They may even choose to run a lemonade stand, sell old toys in a yard sale, or work for a neighbor doing yard work. 

Not only will this teach kids to handle money, it will also help them understand the connection between work, income, and the value of money. 

illustration of person putting coin in three jars labeled spend give and save

Budgeting for Kids

Once the child has money, it’s time they learn to manage it. Budgeting is a scary word for many, but it doesn’t have to be. It’s a simple process of planning where the money will go and not spending more than you have.

A budget is telling your money where to go instead of where it went.

—Dave Ramsey, author, host, and financial guru

All money earned can be divided into three categories: save, spend, and give. You can decide what percentage should be allocated to each category, but a good example for kids is to save 40%, spend 50%, and give 10%. Let’s break down each category below.


Encourage kids to set a percentage of their money aside in savings. This will teach them the importance of planning for the future. It can also instill in them patience and discipline as they save up towards a goal, whether it’s long-term or short-term.

Long-Term Savings

A percentage of savings can be set aside for long-term goals, such as saving money for college, a car, or building an emergency fund. 

Short-Term Savings

Anything the child can’t afford right now can become a short-term goal to work towards, such as a new bike or a video game. Help them map out how long it’ll take to reach their goal.


Have ongoing conversations about wants and needs when it comes to spending their hard earned money. Needs include the basics such as food, shelter, and basic clothing. While wants are the extras like toys, candy, and fun activities.

Practice this concept by quizzing kids on whether an item is a need or a want. This can also help when kids beg you for the new toy they “need” to buy. 

Help kids learn to be smart consumers. Together you can research products, compare prices, and read reviews before going through with a purchase.


Encourage kids to give to charities or causes they care about. This will foster a sense of empathy, generosity, and responsibility. Giving is also a great self-esteem booster, as doing good makes us feel good.

parents letting daughter use their credit card to pay at restaurant

Money Management for Kids

Some kids will benefit from using a piggy bank or clear jars to organize their money so they can physically see it grow or diminish. However, doing it digitally can be just as beneficial and so much easier.

At an early age consider opening a bank account for your child. Any money earned or received as a gift can be deposited here. Make sure to show them the balance often so they’re aware of the changes that come with saving and spending.

Managing savings

For long-term savings there are different options to consider*:

  • 529 college savings plan—a state-sponsored investment plan designed to save for future education expenses. Earnings are tax-free, as are all withdrawals to cover college expenses. Additionally, many states offer incentives or tax benefits for contributions.
  • High-yield savings account—a savings account provided by many banks and credit unions that offers a higher interest rate than traditional savings accounts. Some may require a minimum initial deposit, or charge a small fee for the service.
  • Custodial Brokerage Account—A custodial account allows parents to invest on behalf of their child. The account is in the child’s name but managed by the parent until they reach the age of adulthood (18 or 21, depending on the state). This account can hold a range of investments, such as stocks, bonds, and mutual funds.
  • Roth IRA (individual retirement account)—If your child has earned income (from a part-time job), they are eligible to open a Roth IRA. Roth IRAs offer tax-free growth and tax-free withdrawals in retirement. Contributions can be withdrawn penalty-free at any time, making it a flexible option that can also serve as a long-term savings vehicle.

*Gabb is not a licensed financial institution or advisor, and the information provided here is for general informational purposes only and should not be considered financial advice. Any financial decisions you make should be based on your own research, assessment, and consultation with a qualified financial professional. Always consult with a certified financial advisor or a qualified expert before making any financial decisions.

Managing spending money

We already discussed how to budget, but knowing how to manage that spending money is equally important. The best and easiest way to track expenses is digitally using a debit card such as Greenlight.

greenlight debit card for kids app on cell phone

What is Greenlight?

Greenlight offers a debit card, credit card, investments, and an app designed specifically for kids and teenagers, along with parental controls and educational tools.

Debit card & credit card

The Greenlight debit card can be used anywhere Mastercard is accepted, and is meant to help parents teach their children about responsible money management and financial literacy.

Parents are able to control where and how the debit card is used. They can restrict certain types of spending and allow others at specified stores, which helps children stick to a budget and make wise decisions.


Using Greenlight Max, kids can utilize the app to learn the basics of investing. Each trade executed receives your authorization.

Greenlight app

Within the app, parents are able to assign chores and tasks. Once completed and approved by the parent, the child receives their allowance deposited straight to their Greenlight card. 

Teens with jobs can also set up direct deposit so their paychecks go right into their Greenlight account.

How much is the Greenlight card?

With three different plans to choose from, parents can decide what the best option is for their children. Rates range from $4.99 to $14.98 per month. If your child has a Gabb phone — Gabb Phone, Gabb Phone Plus, or Gabb Phone 3 Pro — then be sure to take advantage of a special offer as part of Gabb’s partnership with Greenlight.

How Can I Protect My Child Financially?

Teaching kids about money is the best way to protect them financially. Remember that the key is to tailor your lessons to your child’s age, maturity level, and individual interests. 

Be patient and repetitive, as financial literacy is a gradual learning process. By laying a strong foundation in their early years, you’re setting your children up for a lifetime of responsible money management.

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