Financial Literacy for Kids

Teaching kids how to make smart money decisions helps set them on the path to a solid financial future. Teach your children the value of money now, and they’ll reap the benefits for years to come.

How to teach kids about money

Talk about money

Money talk tends to be taboo, even within families. But having open, honest conversations about money is the best way for kids to learn.
 
Modeling good money habits — and talking about your decisions — helps your child absorb the lessons. You might explain to your child, for example, how much of your monthly income goes toward paying bills. Do you direct a certain percentage of your paycheck toward savings? Explain why.
 
Some parents, especially if they’re struggling financially, may avoid sharing news that might cause their kids to worry. But children pick up on a lot more than parents might realize. The best approach is to share that the family is facing a challenge, then discuss how you plan to address it. If you model a solutions-oriented approach, your child will likely use that approach in their own life.
 

Teach the value of money

Find opportunities to talk to your child about the value of money. When the family is at the grocery store or a clothing store, get your kids involved in comparison shopping. Read price tags and look for deals. Discuss the size, quality, and features of each option. Explain that brand-name goods are often pricier. Conduct at-home “research” as a family, then discuss whether the extra cost is worth it.
 
When your child wants something — a new bike, a gaming console, concert tickets — share with them how much labor goes into paying for it. If the family needs to cut back on something else to pay for it, let your child know.
 

Start saving early

When kids start saving money at a young age, it can become a lifelong habit. Explain to your kids that saving money allows someone to make large purchases in the future and handle emergencies that come up.
 
Consider giving your child an allowance, so they can earn their own money. When they get paid, you might suggest that they manage their money by dividing it up. For example, they may want to give away 10% of their earnings, save 25% or 30%, and spend the rest. (There are piggy banks with 3 slots to make it easy.) To encourage saving, offer to match any dollar amount that they save.
 
Visual aids can help kids get excited about their progress. Create a chart with sections that your child can color in when they meet certain savings goals, for example.
 
Explain the importance of letting money earn interest so it can grow. Share an example from your own life with your child. Or consider borrowing a small amount of money from your child and then paying them back ​​— with interest. Tangible rewards can help bring lessons to life.

Make learning fun

Teaching your kids about dollars and cents can be fun for the whole family. So tap your creativity to come up with engaging ways to share key ideas.
 

Earning

Have a family conversation about the different types of jobs people do to earn money. You might share some details about your own job, or ask your child which types of jobs they’ve noticed in your city or town. Books like Lemonade in Winter and Arthur’s Funny Money help younger children learn about earning.
 
Help your child earn their own money by offering them an allowance for specific chores, such as $1 for loading the dishwasher and $2 for vacuuming. Then challenge them to earn a specific total by the end of the week, offering them a special treat if they succeed.
 
Another option is to work together as a family on a money-making venture, such as hosting a garage sale. When kids’ own clothing or toys sell, let them keep the proceeds. Set up a brightly-colored food stand for shoppers, and let your kids sell snacks and drinks.
 
Older kids may want to launch their own neighborhood enterprise, perhaps walking dogs, mowing lawns, or washing cars. Help them come up with a catchy name for their business, set prices, and make whimsical flyers to advertise their service.
 

Budgeting

When talking to kids about budgeting, consider creating a contest to get them fully engaged. You might give your child an amount of money — such as $5 or $10 — and challenge them to avoid overspending during the week. If they meet the challenge, give them a prize or a special privilege. Does your child love board games? Games like Pay Day teach kids how to set a monthly budget, pay bills, and save.
 
To help kids develop thoughtful spending habits, talk to them about the difference between wants and needs. You can find Wants vs. Needs flashcards online (some are downloadable to print) to make the learning process fun.
 
When your child has their eye on a new toy or a second pair of sneakers, rather than saying no, challenge them to save for it. If it’s a pricier item, you might agree to pay for half of it, if your child devises a plan to save money for the rest.
 
Kids (and adults) are constantly being subjected to advertising, so it’s easy to forget that fun can be free. Set aside one weekend a month in which the family commits to enjoying time together without spending extra money. That might be an at-home movie night, making crafts together, or heading to the playground or beach. Ask your kids to make their own suggestions.
 

Investing

To help kids wrap their heads around the concept of investing, ask them to name a toy or other item they love. Explain that when you (or perhaps grandma) purchased that item, other people made money. Then explain that they could also become an investor and own part of that company, so they can make money, too. Next, talk to them about the benefits and risks of investing.
 
Online games like Build Your Stax help kids practice making investment decisions to build wealth over time. Books like Rock, Brock, and the Savings Shock highlight the benefits of saving money and compound interest.
 
There are also stock market simulation apps that allow kids to “buy” fake shares of their favorite company’s stock and track its progress. If your child is ready to invest a bit of real money, there are apps that allow them to buy fractional shares.

Learn now, benefit later

Research shows that financial literacy is linked to lower debt and more savings, as well as higher credit scores.

Accounts to help them learn

Opening a bank account is a great way for kids to learn about money management firsthand.
 
You can help your child open any of these Patelco accounts to start saving early:

• Patelco Student Checking account (for kids 13 to 17). This account comes with a Debit Mastercard® that has parental controls, access to 30,000+ fee-free ATMs, and a companion mobile app. Parents who have a Patelco account can easily transfer money to their child’s checking account.
• Patelco Free Checking (for those 18 and above), with no monthly fees or minimum balance requirements. Account holders get a debit card, access to Patelco’s network of fee-free ATMs, and a mobile app. Patelco free checking also integrates with Zelle® and Bill Pay to make sending money easy.
• Patelco Kids Savings (for kids 17 and under). Kids can watch their savings grow over time while paying no monthly fees. Beginning at age 13, kids can get their own ATM card. Parents can opt for a custodial account, giving their child access to funds when they become an adult.
• Patelco Regular Savings (for those 18 and above), with great interest rates and no to low fees. Account holders can visit more than 30,000 fee-free ATMs and link their Patelco savings account to their checking account to avoid paying overdraft fees.
• Patelco Money Market Select (for kids 17 and under). Kids can build their savings, visit Patelco’s fee-free ATMs, and write checks from their money market account.
• Patelco Money Market Plus (for those 18 and above). Young adults who can make deposits of at least $500 each month can open a Money Market Plus account and enjoy a high APR (Annual Percentage Rate) to see their savings grow quickly. Like other Patelco accounts, Money Market Plus comes with access to 30,000+ fee-free ATMs and a mobile app for easy banking.

All Patelco accounts are insured by the National Credit Union Association up to $250,000.