071. 7 Steps to Financial Literacy

Raising Money-Smart Kids

• Facebook
• Instagram

Episode 071:

TWO WAYS TO LISTEN TO THIS EPISODE:
1. Click PLAY Button Above ^^ to listen here.
2. OR Listen on your favorite podcast platform:

Are you just starting your homeschooling journey? We’re here to help! Begin with our Get Started in Homeschooling page and Homeschooling FAQ to make the transition smoother. If you’re guiding a young child, explore our How to Homeschool Kindergarten. to make those first steps special. For middle schoolers, don’t miss our Middle School page packed with tips and advice. And if you’re heading into the high school years, our Essential Steps to Homeschool High School will guide you every step of the way!

Download for this week’s FREEBIES
Savings Bundle & Teen Business Pack

Show Notes

As homeschoolers, we strive to provide our children with a well-rounded education that goes beyond core subjects. We want our kids to thrive in every aspect of life, including essential life skills like financial well-being. For our children, who are just beginning to form their own financial habits and identities, learning about money early on is crucial. By teaching financial literacy, we’re giving them a head start in life, helping them avoid common pitfalls, and setting them up for a future of financial security and independence. Today, we’re exploring practical steps to teach your children the value of money, the importance of saving, and the basics of budgeting in a way that engages them in a hands-on, fun way.

Think about it—money plays a significant role in our lives, from the everyday decisions we make to the long-term goals we set. Financial literacy is not just about understanding dollars and cents; it’s about equipping our children with the tools they need as they grow into adulthood. We want to lay the foundation for financial responsibility that will benefit them for a lifetime. The first thing you want to do is:

1. Start Early (4:30)

Starting financial education early is key. Even preschoolers can begin to understand the concept of money if we introduce it in a playful and relatable way. Nothing beats real-world experience. We suggest starting by giving your child a small allowance, perhaps tied to simple chores like making their bed or helping set the table. We know that this can be controversial. There are two main sides to this debate: allowance vs. commission. With allowance, kids are paid a set weekly or monthly rate, independent of chores or other responsibilities. The second is a commission or work-for-pay system where they are paid for doing chores or making other contributions to the family like pet care and watching younger siblings. Whichever you choose is up to you.

 I have certain expectations that are expected and then my kids can earn money by doing ‘extra’ chores. I feel like this helps them see the connection between work and earning money. And we have certain things that you are expected to do as a contributing member of the family, but sometimes kids want more- maybe they are saving for a favorite toy or game. Maybe you need some additional help around the house!

Activity Idea:

• Allowance and Chores: Begin with a small weekly allowance. Create a chore chart that lists simple tasks your child can do to earn their allowance. For example, they could earn $1 for helping with dinner or setting the table each night or $2 for helping with laundry. This introduces the concept of earning money through effort and responsibility, and it also helps them learn about time management and the value of work.
• Play Store: Set up a “store” at home where they can use their earned money to “buy” things like toys or special snacks. Having a play store allows your kids to make decisions about spending, saving, and understanding the concept of value in a fun way. For more ideas, you can explore engaging financial literacy games on the U.S. Mint’s website, which offers interactive activities to make learning about money fun and the Federal Reserve Comic Books.

2. Saving (7:37)

At some point, your kids will want something that exceeds their immediate budget—this is a perfect opportunity to teach them about saving. Encourage them to set aside a portion of their allowance or gift money regularly. This will introduce them to the concept of delayed gratification and helps them understand the importance of setting financial goals.

Activity Idea:

• Savings Jars: Create three jars labeled “Save,” “Spend,” and “Share.” Each time your child receives money, have them divide it among the jars. For instance, they could put 50% in the “Save” jar, 40% in the “Spend” jar, and 10% in the “Share” jar for charity or gifts. This is a great visual approach that helps them understand different money management strategies, whether it be saving for future needs, budgeting a specific item, and giving to others.

• Savings Challenge: Try a fun savings challenge with your child using our free savings chart! Have them choose something they really want, like a toy or comic book. Every week, sit down together, count their savings, and mark their progress on the chart. Celebrate with them when they hit their goal! This is a great way to teach patience and the joy of working towards something special. We will link our free savings chart on our website so be sure to download it and help turn saving into a rewarding habit.

3. Budgeting (10:12)

Budgeting is a crucial skill that can be taught in a fun way. We suggest turning budgeting into a family project. For example, involve your kids in planning the budget for a family outing or grocery shopping. Show them how to list expenses, prioritize needs, and stick to a budget. This hands-on experience makes budgeting real and relevant to them.

Activity Idea:

• Grocery Budgeting: Give your child a small budget for a specific part of the grocery list, like snacks. Take them shopping with you and let them choose items that fit within their budget. This is a great place to start with young kids. It teaches them about price comparison and the importance of sticking to a budget. This can even count as your math for the day.
• Family Outing Planning: Plan a simple family outing, like a picnic in the park. Give your kids a budget to work with, and have them help choose the food, drinks, and activities while staying within the budget. This helps them understand the importance of planning and making choices that align with financial constraints. It also fosters critical thinking and decision-making. 

4. Discussions About Money (12:00)

It’s so important to talk openly about money with your kids. In our society, discussing financial matters can sometimes be considered taboo, but for our children to be financially literate, these conversations must be part of the dialogue. These discussions should be ongoing and cover everything from how to save and spend wisely to setting financial goals. By discussing both financial successes and some of our challenges, we normalize the ups and downs of managing money. This can make these topics less intimidating and more approachable for our kids. We suggest starting these discussions early and making them a regular part of your family’s routine. Encourage your children to ask questions, and don’t shy away from difficult topics like debt or credit. The more they understand now, the better prepared they’ll be to handle their finances responsibly in the future.

Activity Idea:

• Family Financial Meetings: Hold regular family meetings to discuss financial topics. For example, you could review the family’s monthly budget together and talk about upcoming expenses. You could even talk about saving for some long-term goals like a big family vacation. This will foster open communication and help demystify financial concepts. Ultimately, you want to teach your kids to be comfortable talking about money matters.
• You Need a Budget: The Proven System for Breaking the Paycheck-to-Paycheck Cycle, Getting Out of Debt, and Living the Life You Want. It provides tons of examples on how to budget for everyone. Explained very well every category along with how to set it up.

• Real-Life Scenarios: When faced with a financial decision, involve your child in the process. For example, if you’re deciding whether to buy a new appliance or repair an old one, explain the costs and benefits of each option. Ask for their input, and use it as an opportunity to teach about making wise financial choices. This helps children understand the impact of financial decisions in real-life situations.

5. Hands-On Financial Experience (16:10)

Again, nothing beats real-world experience to gain financial experience. Providing opportunities for them will allow your kids to practice and gain experience with real money. 

Activity Idea:

1. Bank Account: Open a savings account for your child and encourage them to deposit a portion of their allowance or gift money regularly. Show them how to track their balance and understand interest. This activity helps them learn about banking, the benefits of saving, and the basics of managing money in a formal setting. We found a local credit union that worked great for my kids. They even had savings incentives and if they saved a certain percentage, they earned points and they could buy things from their website ‘store’ with their points. Watching their savings grow and learning to manage a bank account really helped them develop a sense of financial responsibility and independence.
2. Gift Shopping: it’s a great idea to have your kids buy gifts for family members with their own money. Take them to a store with their set budget and guide to stay within their limit. This activity is two fold- it teaches them to think about others and manage their budget,

6. Teach Through Play (19:00)

Kids learn best when they’re having fun, so we suggest incorporating financial lessons into their playtime. Set up a play store or restaurant, complete with play money and a cash register. This not only teaches them about money but also reinforces math and social skills.

Activity Idea:

• Play Store: Create a pretend “store” at home with items from around the house. Give your child real money and let them “shop” for items. I know a lot of people like to use play money, but I believe there’s huge value in getting kids to handle real money. Encourage them to make decisions based on their budget. We loved doing this when my kids were little. We had this super cool cash register that used real money so they could ‘check out’. This is such a fun way to introduce basic financial concepts like transactions and budgeting. 
• Lemonade Stand: Help your child set up a lemonade stand or another small business. Guide them through the process of pricing, selling, and counting profits. This hands-on experience teaches them the basics of entrepreneurship, money management, and customer interaction, all while fostering creativity and problem-solving skills. I would buy all the supplies and the kids earned a ton of money, but I always made them pay me back for the supplies. It’s all part of learning how finances work. 

Money games:

• Cash Register and Money Store 3+
• Exact Change Card Game 6+
• Pay Day 8+
• Act Your Wage! 10+
• Cash Flow 101 Money Management 13+
• Money Bags Coin Value Game 6+
• Cover Your A$$ETS 7+
• Monopoly 8+

7. Teens and Young Adults (23:23)

As your kids grow into their teenage years, their financial education should evolve right along with them. This is an exciting time to introduce them to more advanced financial concepts like earning their own money, budgeting for personal expenses, and even investing for the future.

Activity Idea:

• Part Time Job: Getting a job can be such a rewarding experience for teens—not just because they’re earning their own money, but because they’re learning the value of hard work and responsibility. Whether they’re babysitting, mowing lawns, or working at a local coffee shop, it’s important to encourage them to set some financial goals for their earnings. Maybe they want to save up for something special like a car or start a savings fund for college. Sit down together and help them create a budget that makes sense for their goals and help them find balance between saving and spending. Homeschoolers are famous for becoming entrepreneurs and I created a Free Entrepreneur Business Pack – I’ll link it in the show notes. As a business owner myself, I really wanted to make something available for our kids. It’s filled with tools and templates to help them start and manage their own small business—whether that’s a lemonade stand, a lawn care service, or selling crocheted stuffed animals on Etsy. This is such a confidence-builder and teaches them so many skills like customer service and the basics of running a business. It’s a great way to show them that with a bit of effort and creativity, they can achieve something really cool. Plus, it looks great on a resume!  

• Meal Planning: We talked about the importance of budgeting at the grocery store but you can take it even further with teenagers. Empower them by giving them a weekly budget and guiding them in creating a grocery list based on planned meals. Take them shopping and compare products to ensure they stay within the budget. This activity teaches them how to manage money and also fosters decision-making skills and teaches organization skills. Get your FREE Meal Planners 
• Investing Together: If your child has saved some money, consider introducing them to investing. You can open a custodial brokerage account and guide them as they choose a few stocks. You can have regular “investment meetings” to review how their stocks are doing and talk about different investment strategies. Maybe you want to pick some of your own stocks too to report at your meetings. This can help them understand the basics of investing and the importance of long-term financial planning. It’s also a great way to bond. 

---

Keep the Conversation Going

Remember, teaching financial literacy is not a one-time lesson—it’s an ongoing conversation. Be there to guide your kids, offer advice, and model good financial behavior. Your goal is to equip your children with the tools they need to navigate their financial futures confidently.We hope these steps inspire you to start teaching your children about money in a way that’s engaging and practical. By instilling these values early, you’re setting them up for a lifetime of financial success and independence. We’re excited to hear how you’re introducing financial literacy to your kids—let’s raise a generation of financially savvy, responsible, and independent young adults!

Money games:

• Cash Register and Money Store 3+
• Exact Change Card Game 6+
• Pay Day 8+
• Act Your Wage! 10+
• Cash Flow 101 Money Management 13+
• Money Bags Coin Value Game 6+
• Cover Your A$$ETS 7+
• Monopoly 8+

Books to Explore:

• Clark Smart Parents, Clark Smart Kids by Clark Howard
• Money Matters for Kids by Larry Burkett

• Smart Money, Smart Kids by Dave Ramsey

• The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money by Ron Lieber

• Growing Money: A Complete Investing Guide for Kids by Gail Karlitz and Debbie Honig

This Week’s Free Resources