Americans struggle with financial literacy — and it's putting their futures at risk.[cite::219::cite] As noted in a recent Forbes piece, 44 percent of Americans don't have the cash to cover a $400 emergency and over one-third haven't saved anything for retirement. According to Visual Capitalist, meanwhile, American adults have been getting consistently worse at answering basic finance questions, increasing their likelihood of making poor decisions and reducing their financial stability.

The result? The sooner kids learn about finance, money and risk, the better. Wondering how to teach teenagers about money and get younger kids interested? We've got you covered.

Helping Create a More Certain Future with Financial Literacy

Fewer U.S. schools now require students to take economics and finance courses — as noted by CNBC, just 20 states mandate economics for graduating students and only 17 expect teenagers to complete financial management classes. 

This is a missed opportunity. According to the National Financial Educators Council, "people who acquire financial literacy in childhood are happier, healthier, and more confident as adults." In addition, young adults with solid financial knowledge enjoy lower debt delinquency rates and develop better credit habits, are more likely to diversify risk, and enjoy a 5.2 percent boost in credit scores within two years of taking a financial literacy course.

While economic educators push for more finance-focused content in schools, and non-profit organizations like the Girls Rule Foundation look to teach teenagers about money management, leadership and self-reliance, parents and guardians remain the first point of contact for many kids when it comes to managing money. With the right mindset — and the right tools — it's possible to help guide kids along the path to a more certain financial future.

How Early Is Too Early?

The earlier kids start learning about money, the better. While younger children aren't ready for advanced concepts like interest, debt, and credit, there's a solid case for financial literacy starting at age 3 or 4. 

Numbers are key here — once kids can reliably count and understand the concept of counting, you can introduce the concept of money and demonstrate how it takes a certain amount of money to buy things. Using plastic coins or handwritten paper bills, you can create a pretend storefront where kids "buy" items by providing the right amount of money. Then, reiterate the concept when you go to the grocery or convenience store by paying for smaller items with cash and showing kids the consistency of money-based transactions.

Is It Ever Too Late?

Never. Even if kids have reached their teen years with no knowledge of financial concepts, it's possible to get them up-to-speed and reduce the risk of bad spending habits.

Best bet? Teach kids about money according to their age and capabilities — if they're out of their depth or frustrated, the benefits are limited: 

  • Ages 2 - 5 - As noted above, this is a good age to introduce the concept of money and tie it to counting. Also a good idea? Have kids pay for small transactions to see what things cost. According to Debt.com, around age 3 is a good time to introduce the "three piggybanks" system — one for saving, one for spending, and one for charity.
  • Ages 6 - 10 - At this age, it's a good idea to open a savings account for your child at your local bank branch. Take them with you so they can see the process and speak with the bank staff. Kids in this age range may also be ready for allowances. Here, make sure to tie any allowance to chores or jobs that must be performed each week. Explain that if jobs aren't completed, kids don't receive any money. If they ask for toys, candy, or other small items, consider having them pay using any money they've saved at home — this empowers their financial independence and demonstrates that money is finite.
  • Ages 11 - 14 - Looking for jobs outside the home — washing cars, cutting grass, shoveling snow — is a great way to reinforce the work-for-money concept. Volunteering with your child can also install empathy and drive home the point that not everyone has money — as a result, it's important to spend and save it wisely.
  • Ages 15 - 18 - The "buy me a car" years. Consider a matching program where you contribute the same amount your child has saved toward a used car. This is also a great opportunity to talk about long-term costs such as fuel, maintenance, and insurance.

Finding the Right Teaching Tools

The right tools are critical to empowering financial literacy. For younger kids, apps like Renegade Buggies help educate children about saving money while grocery shopping. By comparing unit sizes and buying in bulk where appropriate, the app teaches spending habits that offer long-term benefits. Older kids can benefit from applications like Bankaroo, which acts as a virtual bank to track allowance and gift savings and allows kids to set goals for items or experiences they want.

Older kids — especially those with part-time jobs — can benefit from a basic introduction to debit and credit cards. Prepaid debit cards for teens, such as OnCard, are shared with other family members, have a finite limit, and can be locked or unlocked by parents. This gives kids more freedom over their money while still providing parents with some spending transparency. 

Financial Head Start

Parents often wonder how to teach teenagers about money, especially if they've always been given exactly what they want without having to worry about cost. 

Your best bet is to start the conversation as early as possible. Get young kids involved by showing them the value of money, how it works and what happens when you don't have enough. Leverage tools like saving apps and prepaid debit cards for teens to help encourage money management and give them a financial head start. 

Got a kid who's ready to save? See what our Young Savers account can do for their financial literacy.

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