Enriching Education - The Future of Financial Literacy: Why It Should Be Taught to Kids as Early as Possible

By April Taylor, Founder – Jr. Moguls

What kids learn early in life sets the foundation for their future experiences. That’s why key skills need to be taught early and reinforced often to give kids what they need to excel in life.

Financial literacy is one of those skills. When kids develop a solid understanding of how to handle their finances in a healthy and empowering way, they gain the ability to earn, save, and grow their money. As a result, they learn how they can live a life of financial success.

Parents must make financial literacy a priority

If asked, every parent would say they would love to see their child be financially successful. However, many also fail to make teaching their children financial literacy a priority.

There are several reasons why parents shy away from talking to kids about money, starting with the fact that few have a firm grasp of financial literacy themselves. A recent study testing the financial literacy of American adults showed that 57 percent received a failing grade. Parents who are struggling financially may feel like they are in no position to talk about money with their kids.

Money talks can also get bumped to the bottom of the priority list by parents who feel overwhelmed with all of the lessons they must teach to young children. Kids entering school require help with a wide range of topics, from tying their shoes to writing their name to sharing with classmates, so even parents who know the value of financial literacy may feel it better to wait until kids are “a little older” to help them master money skills.

But delaying doesn’t help your kids. Financial literacy is more than a set of skills; it is a mindset. The earlier that kids learn these lessons, the easier it will be for them to foster and grow into a lifestyle that supports financial success.

Financial literacy is a preschool skill

Parents should start talking to their kids about money when they are four to five years old. Initial discussions can focus simply on how money is used or what it is spent on, with parents sharing some real-world examples of how they earn money and some of the ways they choose to spend it. In the early phases, lessons on financial literacy should be practical and connected to everyday experience.

As kids get a little older, they can be given their own money and taught how to manage it properly. For example, parents can use the “Three Jar Method” to teach kids to separate their money into categories of saving, spending, and giving. Having children help plan a pizza night by determining how the funds will be allocated helps them understand budgeting and be more aware of their money and spending.

Empowerment is a key goal of financial literacy

Lessons in financial literacy give kids the skills they need to take control of their financial future. Those who lack key skills can easily find themselves dependent on others for their financial security.

Lessons on saving, for instance, help teach kids that money doesn't grow on trees. Kids who learn to save are taught discipline, which is a skill they can apply to many areas of their lives. Similarly, kids who understand how to manage their spending gain a strong sense of how to value a dollar and the time it takes to earn one, which can instill responsibility and independence.

Reinvesting is also an essential financial skill to teach children. Putting their money to work for them helps kids to appreciate the power of compound interest, time, and growth.

Kids can also be taught to invest in themselves by engaging in entrepreneurial exercises. By using their money to start a small business, kids learn work ethic, focus, confidence, resilience, and other life and business skills.

Parents who take the time to teach their kids key financial concepts are making an investment in the next generation that benefits society as a whole, as financially literate kids grow into adults who are bold, confident, and innovative. They become a generation of thinkers who are better stewards of money and more equipped entrepreneurs, forming a society that's better able to navigate challenges and guide others to financial independence.

– April Taylor is a multi-faceted entrepreneur, speaker, financial coach, and the visionary founder of Jr. Moguls, a platform designed to cultivate the next generation of confident, business-minded leaders. As a single mother, April raised her two children to become six- and seven-figure business owners. Through her work with Jr. Moguls, she is dedicated to teaching other families the financial literacy and entrepreneurial skills needed to create sustainable wealth for future generations.