How to teach kids about money | Financial literacy for kids (2024)

Table of Contents
Key takeaways Medium of exchange Talking to your kids about money 1. Make money real for young kids 2. You can bank on it 3. Check it out 4. Start with debit cards 5. Build smart online consumers Help your teen learn about money More to explore Explore educational content See more articles for parents Looking for more ideas and insights? Thanks for subscribing! We're on our way, but not quite there yet Oh, hello again! Thanks for subscribing to Looking for more ideas and insights? You might like these too: Fidelity Viewpoints® Decode Crypto Fidelity Smart Money℠ Active Investor Insights from Fidelity Wealth Management ℠ Women Talk Money Educational Webinars and Events FAQs

Tips to help kids and teens make sense of money in a digital world.

Fidelity Viewpoints

How to teach kids about money | Financial literacy for kids (1)

Key takeaways

  • Start young kids off with real money before introducing them to the digital world of money.
  • Make sure kids know that using digital money is not a game and will have real consequences.
  • Introduce teens to safe digital spending using financial tools, such as debit cards.

Today, digital money is business as usual, as more people use their smart devices to conduct their financial transactions. So how do you teach children about money in this digital age?

Medium of exchange

Language is one of the early experiences a child will have with abstract, symbolic concepts. And if a child can work that one out, they can work out that silver coins and green pieces of paper can be exchanged for things they really want. The question is: When do they understand this?

If you ask your children what Mommy or Daddy do with money, and they can answer "buy things with it," then they've grasped the basic concept of using money as a medium of exchange.

Talking to your kids about money

Explore more stories that can help facilitate money conversations with your children and teens.

Because this young generation has grown up in the digital world, they're incredibly comfortable with the virtual universe. They probably were introduced to this world via video gaming. And many video games, even educational ones, reward players with virtual money that they can use to buy in-game rewards, like pets, clothes, furniture, and more. So subtly, kids are being introduced to the concept of medium of exchange, and the power of earning and spending already.

But playing these video games and "earning" fake money can cause confusion between digital gameplay and the real world of money—which can lead to unwanted problems in adulthood.

Here are 5 tips to help you introduce your kids to digital money:

1. Make money real for young kids

It's the tangibility of money that makes it such a useful tool in teaching children how the world is structured. To make lessons real, start with actual hard currency before introducing your kids to the digital kind. Coins and bills are tangible and visible. Kids still see them every day, and they quickly grasp the general concept.

Incorporate counting and coin-sorting activities into your gameplay. Get some items out of your pantry and put "price tags" on each, then give your kids a pile of change. Have them count out the right amount to buy every item. As they grasp this concept, you can start to teach them how to make change, an important life skill.

2. You can bank on it

Take kids into a physical bank and allow them to deposit some of their real gift money or, even better, hard-earned allowance, into a joint savings account with you. Then go home and show them how their bills and coins became digital money in their online account. Explain that banks hold both hard currency and virtual money.

See Also
Bored? 20 Sites You Can Use to Make Extra Money Right NowHow to Make Money with Your Recipes - MBA sahmMy Filofax Budget Envelope SystemFree Budget Binder Printables: Make Saving Money Easy

3. Check it out

After your kids have mastered a savings account, set up a joint checking account and allow them to use some of their spending money. Show kids how to write a check, just so they understand how it works. Although this is a disappearing life skill—even the US Department of the Treasury1 sends most of its Social Security checks out electronically—it's still important to know.

When they're elementary school age, kids should be ready to understand electronic spending. If they receive an allowance, show your kids how you're paying them by putting money into their online account. When they want to spend physical money, a trip to the ATM to get cash will reinforce how real money can become digital money and vice versa.

It's also a great time to discuss what ATM fees might be involved. Explain that the bank is providing a service that must be paid for; the ATM needs to be serviced by real people, who load the machine with bills. Some banks or financial institutions may not charge or may reimburse fees, but in general it's good to prepare kids to pay attention to fees. Also, explain that ATM cardholders get a secret personal identification number (PIN)—that should never be shared with anyone—that allows them to deposit and withdraw money.

How to teach kids about money | Financial literacy for kids (2)

Sign up for Fidelity Viewpoints weekly email for our latest insights.


Subscribe now

4. Start with debit cards

Teens innately understand digital money. But they may need help understanding that money, digital or not, is a finite resource. Debit cards do just that.

Explain that a debit card may look like a credit card, but the bank makes you have money in your account in order to use it as a convenient way to buy things. When you run out of money, the debit card doesn't work. Teens also have many payment and money movement options available to them, but begin with a debit card, and then you can expand the lessons to include other monetary tools.

5. Build smart online consumers

Older teens understand the world of online advertising and know that social media gives them important information to make them savvy consumers. Teens can research their choices, shop sales, read reviews, compare products, and hopefully hold off on impulse shopping.

Taking a 2-week time-out to really research an expensive purchase can help to distinguish a want from a WANT for a teen. See if your teen will agree to "press pause" for 2 weeks to think about why they want to buy something and if they're committed to using their own money. If your teen is earning their own money, their spending decisions will be even more valuable to them.

We live in an exciting new electronic world, but it's our job as parents and grandparents to prepare our next generation for how this new world influences them. It's also important to teach kids and teens to protect themselves from hackers and lurkers. Their private information can be stolen and they need to learn ways to protect it.

When it comes to money and children, it's not important what form it is, how it's created, or how it moves. When it comes to money, it's all about teaching your values and life skills to your kids … nothing more, nothing less.

Help your teen learn about money

The Fidelity Youth™ Account gives teens the power to save, spend, and invest their money.

More to explore

Timely news and insights from our pros on markets, investing, and personal finance.

Looking for more ideas and insights?

We'll deliver them right to your inbox.

Manage subscriptions

Thanks for subscribing!

Check out your Favorites page, where you can:

  • Tell us the topics you want to learn more about
  • View content you've saved for later
  • Subscribe to our newsletters

We're on our way, but not quite there yet

Good news, you're on the early-access list.
But we're not available in your state just yet. As soon as we are, we'll let you know. In the meantime, boost your crypto brainpower in our Learning Center.

Manage subscriptions

Oh, hello again!

Good news, you’re already on the early-access list. Keep an eye on your email for your invitation to Fidelity Crypto.

Manage subscriptions

All fields are required. First name

Enter your first name. Enter your first name. First name must be no more than 30 characters. First name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Last name

Please enter a valid last name. e.g. Doe. Enter your last name. Last name must be no more than 30 characters. Last name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Email address

Enter a valid email address. e.g. name@fidelity.com. Enter your email address. Enter a valid email address (like name@fidelity.com). Email address can not exceed 100 characters. Please enter a valid email address. e.g. name@fidelity.com.

Subscribe Subscribe
Thank you for subscribing. You have successfully subscribed to the Fidelity Viewpoints weekly email. You should begin receiving the email in 7–10 business days. We were unable to process your request. Please Click Here to go to Viewpoints signup page.
All fields are required. First name

Enter your first name. Enter your first name. First name must be no more than 30 characters. First name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Last name

Please enter a valid last name. e.g. Doe. Enter your last name. Last name must be no more than 30 characters. Last name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Email address

Enter a valid email address. e.g. name@fidelity.com. Enter your email address. Enter a valid email address (like name@fidelity.com). Email address can not exceed 100 characters. Please enter a valid email address. e.g. name@fidelity.com.

Subscribe Subscribe
Thank you for subscribing Nice work! Need to edit for crypto. We'll be in touch soon. In the meantime, visit Need to edit for crypto to stay up to date. We're unable to complete your request at this time due to a system error. Please try again after a few minutes.
All fields are required. First name

Enter your first name. Enter your first name. First name must be no more than 30 characters. First name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Last name

Please enter a valid last name. e.g. Doe. Enter your last name. Last name must be no more than 30 characters. Last name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Email address

Enter a valid email address. e.g. name@fidelity.com. Enter your email address. Enter a valid email address (like name@fidelity.com). Email address can not exceed 100 characters. Please enter a valid email address. e.g. name@fidelity.com.

Subscribe Subscribe
Thank you for subscribing. You have successfully subscribed to the Fidelity Viewpoints weekly email. You should begin receiving the email in 7–10 business days. We were unable to process your request. Please Click Here to go to Viewpoints signup page.
All fields are required. First name

Enter your first name. Enter your first name. First name must be no more than 30 characters. First name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Last name

Please enter a valid last name. e.g. Doe. Enter your last name. Last name must be no more than 30 characters. Last name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Email address

Enter a valid email address. e.g. name@fidelity.com. Enter your email address. Enter a valid email address (like name@fidelity.com). Email address can not exceed 100 characters. Please enter a valid email address. e.g. name@fidelity.com.

Subscribe Subscribe
Thank you for subscribing. You will begin receiving the Fidelity Viewpoints Active Investor newsletter. We were unable to process your request. Please visit www.fidelity.com/viewpoints.
All fields are required. First name

Enter your first name. Enter your first name. First name must be no more than 30 characters. First name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Last name

Please enter a valid last name. e.g. Doe. Enter your last name. Last name must be no more than 30 characters. Last name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Email address

Enter a valid email address. e.g. name@fidelity.com. Enter your email address. Enter a valid email address (like name@fidelity.com). Email address can not exceed 100 characters. Please enter a valid email address. e.g. name@fidelity.com.

Subscribe Subscribe
Thank you for subscribing. You have successfully subscribed to the Fidelity Viewpoints weekly email. You should begin receiving the email in 7–10 business days. We were unable to process your request. Please Click Here to go to Viewpoints signup page.
All fields are required. First name

Enter your first name. Enter your first name. First name must be no more than 30 characters. First name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Last name

Please enter a valid last name. e.g. Doe. Enter your last name. Last name must be no more than 30 characters. Last name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Email address

Enter a valid email address. e.g. name@fidelity.com. Enter your email address. Enter a valid email address (like name@fidelity.com). Email address can not exceed 100 characters. Please enter a valid email address. e.g. name@fidelity.com.

Subscribe Subscribe
Thank you for subscribing Nice work! Get ready to unleash your inner investor. We'll be in touch soon. In the meantime, visit Women Talk Money to stay up to date. We're unable to complete your request at this time due to a system error. Please try again after a few minutes.
All fields are required. First name

Enter your first name. Enter your first name. First name must be no more than 30 characters. First name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Last name

Please enter a valid last name. e.g. Doe. Enter your last name. Last name must be no more than 30 characters. Last name must be at least 2 characters. Sorry, we can't update your subscriptions right now. Please try again later.

Email address

Enter a valid email address. e.g. name@fidelity.com. Enter your email address. Enter a valid email address (like name@fidelity.com). Email address can not exceed 100 characters. Please enter a valid email address. e.g. name@fidelity.com.

Subscribe Subscribe
Thank you for subscribing Nice work! Get ready to unleash your inner investor. We'll be in touch soon. In the meantime, visit Women Talk Money to stay up to date. We're unable to complete your request at this time due to a system error. Please try again after a few minutes.

Thanks for subscribing to

Looking for more ideas and insights?
You might like these too:

Looking for more ideas and insights? You might like these too:

Fidelity Viewpoints®

Timely news and insights from our pros on markets, investing, and personal finance.

Decode Crypto

Clarity on crypto every month. Build your knowledge with education for all levels.

Fidelity Smart Money℠

What the news means for your money, plus tips to help you spend, save, and invest.

Active Investor

Our most advanced investment insights, strategies, and tools.

Insights from Fidelity Wealth Management ℠

Timely news, events, and wealth strategies from top Fidelity thought leaders.

Women Talk Money

Real talk and helpful tips about money, investing, and careers.

Educational Webinars and Events

Free financial education from Fidelity and other leading industry professionals.

Fidelity Viewpoints® Timely news and insights from our pros on markets, investing, and personal finance. Decode Crypto Clarity on crypto every month. Build your knowledge with education for all levels. Fidelity Smart Money℠ What the news means for your money, plus tips to help you spend, save, and invest. Active Investor Our most advanced investment insights, strategies, and tools. Insights from Fidelity Wealth Management ℠ Timely news, events, and wealth strategies from top Fidelity thought leaders. Women Talk Money Real talk and helpful tips about money, investing, and careers. Educational Webinars and Events Free financial education from Fidelity and other leading industry professionals.

Done

Add subscriptions No, thanks.

How to teach kids about money | Financial literacy for kids (2024)

FAQs

How to teach kids about money | Financial literacy for kids? ›

Earning an allowance through household chores or working at a part-time job can help kids build financial literacy. Opening a savings account, a kid-friendly debit card, or a custodial brokerage account teaches kids the value of saving and introduces them to the banking system.

Get More Info Here ›
How to teach your kids about financial literacy? ›

Earning an allowance through household chores or working at a part-time job can help kids build financial literacy. Opening a savings account, a kid-friendly debit card, or a custodial brokerage account teaches kids the value of saving and introduces them to the banking system.

Explore More ›
How do I teach basic financial literacy? ›

Start by teaching them about budgeting and managing expenses. Explain how credit works, why it's important, and how to use credit cards responsibly. Stress the importance of saving, and introduce the basic ways to invest money.

Show Me More ›
How do you teach rich kids about money? ›

Use allowances to teach children how to handle wealth. Have them divide their allowance into three equal parts. One-third goes toward their own pleasure, one-third into savings and one-third to charity. This method helps them learn about other uses of money, beyond buying them things.

Learn More ›
How to teach basic money skills? ›

Toddlers
  1. Set up a pretend store. ...
  2. Read books about money. ...
  3. Practice identifying coins and bills. ...
  4. Use a clear container for their savings. ...
  5. Talk to your kids about money. ...
  6. Let them buy things with their money. ...
  7. Let them make choices with their money. ...
  8. Pay them for the work they do around the house.

Discover More Details ›
What is the 50 30 20 rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.

Discover More Details ›
What is the concept of money for kids? ›

Money is a mode of payment accepted by both sellers and buyers for goods and services. Money is what we give in return when we buy stuff like food, clothes, house, groceries, etc. We give money in return for purchasing anything. This is a simple trade or exchange.

See More ›
What are the three C's in financial literacy? ›

Character, capital (or collateral), and capacity make up the three C's of credit. Credit history, sufficient finances for repayment, and collateral are all factors in establishing credit. A person's character is based on their ability to pay their bills on time, which includes their past payments.

Learn More ›
What are the 5 key principles of financial literacy? ›

The five principles of financial literacy
  • Earn.
  • Save and invest.
  • Protect.
  • Spend.
  • Borrow and manage debt.
Mar 26, 2024

Read On ›
What is the best age to teach kids about money? ›

Kids between the ages of 6 and 8 may start to understand how money works. "As soon as your child is receiving an allowance, he'll need a place to put his money," says Pearl.

Find Out More ›

What parents should teach their kids about money? ›

10 ways parents can teach their children about money
  • 1) Have a conversation. ...
  • 2) Don't forgot about physical cash. ...
  • 3) Explain how money is earned. ...
  • 4) Explore the difference between need and want. ...
  • 5) Set Savings Challenges. ...
  • 6) Involve them in the weekly shop. ...
  • 7) Talk about different ways to pay.

Explore More ›
What age do kids learn about money? ›

By age 3, your kids can grasp basic money concepts. By age 7, many of their money habits are already set. That doesn't mean you throw in the towel after first grade. Start wringing money lessons out of everyday life.

Get More Info ›
What is the first thing to learn about money? ›

Many Americans lack basic personal finance knowledge, but there are plenty of opportunities to learn. The Takeaway: Personal finance beginners should start with the basics of earning, saving, spending, investing, and insuring their assets.

Discover More Details ›
How do you teach money to first class? ›

A good way to teach them is to sort their coins by value and use as many of the biggest value coins as they can before they have to switch to the next value down (for example, use quarters to make the number as high as possible without going over until they need to switch to dimes or nickels).

Find Out More ›
What is the most effective method to teach financial literacy? ›

Children learn best through practical examples. Involve them in age-appropriate discussions about family finances, like planning a budget for a family vacation or comparing prices while shopping. Real-life scenarios help children understand the value of money and the importance of making wise financial choices.

Continue Reading ›
When should kids learn about financial literacy? ›

Wunder said six is the age where kids start being able to grasp some money concepts. “This is the age children are starting to understand math at school and are able to comprehend the consequences of 'if it's gone, it's gone' and setting aside money for things they really want,” he said.

Continue Reading ›
What age do you teach financial literacy? ›

Kids between the ages of 6 and 8 may start to understand how money works. "As soon as your child is receiving an allowance, he'll need a place to put his money," says Pearl.

Explore More ›
Do parents teach financial literacy? ›

“Your children learn from your habits and the way you spend or save and even talk about money will shape how your children manage money in the future, even if you don't realize it,” says Woroch. It can be as simple as using positive language when you talk about money.

Get More Info Here ›
Top Articles
Rule of 72: Formula, How To Use, Advantage & Disadvantage | 5paisa
These Are The 15 Largest Banks In The U.S. | Bankrate
Schönwalde-Glien - Aktuelle Nachrichten und Kommentare - MAZ
R. Kelly Net Worth 2024: The King Of R&B's Rise And Fall
Strange World Showtimes Near Cmx Downtown At The Gardens 16
Wedding Cakes in Allentown, PA
Craigslist Golf Carts Sport For Sale
13 Best Internet Providers Near You | Tempe, AZ July 2024
DM13001 Desk Blotter - Tulsa County Jail Information
Tulsa County Jail, OK Inmate Search: Roster & Mugshots
Nwsflagstaff
Texas Motors Specialty Photos
Latest Posts
How to Get Facebook Fan Page Verified | 5 FB Page Verification Tips
Indirect expenses definition — AccountingTools
Article information

Author: Nathanial Hackett

Last Updated:

Views: 5996

Rating: 4.1 / 5 (72 voted)

Reviews: 87% of readers found this page helpful

Author information

Name: Nathanial Hackett

Birthday: 1997-10-09

Address: Apt. 935 264 Abshire Canyon, South Nerissachester, NM 01800

Phone: +9752624861224

Job: Forward Technology Assistant

Hobby: Listening to music, Shopping, Vacation, Baton twirling, Flower arranging, Blacksmithing, Do it yourself

Introduction: My name is Nathanial Hackett, I am a lovely, curious, smiling, lively, thoughtful, courageous, lively person who loves writing and wants to share my knowledge and understanding with you.