Think Like a Kid

The best way to teach children financial literacy is to figure out what they want (and need) to know. Here's help.

One of the perks of my job is that I’m often invited to speak to various groups on financial topics. I hope the people who come to listen can benefit from my experience as an editor, a parent, a consumer and an investor. I know it certainly works the other way around: I learn as much from them as I hope they learn from me.

Recently, I’ve spoken to two groups of educators on the subject of financial literacy. These are the folks in the trenches who preach the gospel of fiscal responsibility to both adults and children. It’s a tall order, especially for kids, whose eyes glaze over unless you can find some way to pique their interest and get them involved.

After writing about kids and money for nearly 20 years, I’ve concluded that the best way to do that is to think like a kid. That was the theme of my talk to 260 teachers at a conference sponsored by the Jump$tart Coalition. For guidance I relied on real questions I get from kids themselves (see What Kids Want to Know About Money and More Things Kids Want to Know About Money.

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In their own words, here’s a rundown on what kids want (and need) to know, plus a list of resources that do a good job of capturing their attention.

Kids are clueless about how to earn money. “Where can I find a job that lets me make heaps of money and have fun at the same time?”

There’s probably no easy answer to that one. But the book Isabel’s Car Wa$h, by FDIC chairwoman Sheila Bair, gives elementary-age kids an introduction to starting a business, including how to raise capital by finding investors. The book won an Excellence in Financial Literacy Education (EIFLE) award from the Institute for Financial Literacy.

Also an EIFLE award winner: The Millionaire Kid$ Club, a series of books published by Money Savvy Generation. Authors Susan Beacham and Lynnette Khalfani-Cox offer moneymaking ideas, but they also tackle tough issues, such as mortgages and foreclosures, and present some fascinating answers to the question, “What can you do with just one penny?”

Biz Kid$ targets 9- to 14-year-olds and has produced 39 shows on entrepreneurial themes for PBS stations. Its Web site also covers other financial topics. I particularly like the video in which a young girl ditches a credit card in favor of a debit card -- one of my favorite themes.

Kids are clueless about managing money. “How do you save your money and not spend it? I usually can’t do that.”

Right on the Money, a curriculum developed by the Penn State Cooperative Extension and the Pennsylvania Office of Financial Education (also an EIFLE award winner), is aimed not only at kids ages 5 to 7 but their parents as well.

Children learn how to distinguish between wants and needs and how to make choices with their money. Teachers get helpful step-by-step guidance on kicking off a discussion by reading kid-themed books about money, such as The Berenstain Bears’ Trouble With Money and others in the Berenstain Bears series (always a hit with my own children).

Another well-rounded curriculum is Kids Count, developed for elementary-age youngsters by Networks Financial Institute at Indiana State University. It also comes in a family-friendly board game that presents kids with scenarios to be resolved: Is a pair of dance slippers a need or a want if you’re ballerina? Does a “free” kitten have any hidden expenses?

Older students are challenged by games that require them to handle more-complicated real-life situations. For instance, a group called Banzai presents scenarios to middle school and high school students that include getting a job, paying down credit-card debt and renting an apartment.

Kids are clueless about how to save money. “I am 19 years old. How much money should I be saving to become a millionaire by 35?”

A great tool here is KidsSave, a program that encourages kids to save by emphasizing how fast money can grow.

And middle school students are old enough to play the Stock Market Game, a stock-market simulation that helps kids learn about other money concepts as well.

Kids are clueless about credit and plastic. “I am 18. I have a child on the way and no job. How can I get a credit card to help us out on bills and such things?”

Clearly some basics are in order -- such as credit cards are not cash. The Banzai scenarios work well for older teens, as does the most sophisticated game I came across: Moneytopia, which is free on the Securities and Exchange Commission Web site.

One of the most innovative and interactive teaching resources is the National Theatre for Children, which uses live skits and improv comedy to teach kids the principles of credit , saving, investing and compound interest.

And for young adults there’s MoneyU, a sophisticated program that covers such topics as “Is graduate school worth it?” and “Keeping your credit score high.” It was named one of the best education offerings for 2008 by Tech & Learning.

Janet Bodnar

Janet Bodnar is editor-at-large of Kiplinger's Personal Finance, a position she assumed after retiring as editor of the magazine after eight years at the helm. She is a nationally recognized expert on the subjects of women and money, children's and family finances, and financial literacy. She is the author of two books, Money Smart Women and Raising Money Smart Kids. As editor-at-large, she writes two popular columns for Kiplinger, "Money Smart Women" and "Living in Retirement." Bodnar is a graduate of St. Bonaventure University and is a member of its Board of Trustees. She received her master's degree from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.