Addressing America’s Financial Literacy Crisis Begins at Home
Budgeting, investing, saving, paying bills on time … all of these skills are essential to master. To help your own kids on their path to financial success, start with these three steps.
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Newsletter sign up Newsletter

We’ve known for some time that many Americans struggle with understanding finances. Unfortunately, it’s a problem that appears to be worsening in our country. I was startled to learn that only 34% of Americans can answer at least four of five basic financial literacy questions on topics such as mortgages, interest rates, inflation and risk according to FINRA (opens in new tab).
Despite some noble efforts at the federal, state and local levels, a portion of the population remains financially illiterate – meaning they lack the ability to understand and effectively use various financial skills, including personal financial management, budgeting and investing. Without these skills, Americans struggle with everyday tasks, like paying bills on time, as well as larger goals, like planning for retirement or buying a home.
We’re going to have to come together as a country to address this challenge. However, as individuals and parents, an easy place to start is with our own children. Here are three thoughts on how you can help the next generation bridge the financial literacy gap:

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Step 1: Talk to Your Kids About Money
Education starts at home, and it’s never too early to have conversations about money with your children.
Only 28% of parents are currently talking to their kids about money, according to a study by the Boeing Employees Credit Union (opens in new tab). This is often based on fear, embarrassment or the belief that money is a taboo conversation topic, which we must overcome as a society.
Your children will benefit from learning about the financial decisions that benefitted you as well as missteps you may have made along the way. Helping them understand your spending habits, how you manage the family budget and think about debt will make them feel more comfortable asking questions. It also helps them begin to build a road map for when the time comes to manage their own finances.
Step 2: Create an At-Home Project
A great way to enhance financial literacy is through hands-on experience. Setting up a learning project at home is a great way to get your children thinking about financial responsibility.
One way to do this is by challenging them to set a monthly budget for their spending money and helping them open a savings account where they can put a small portion of their money away. This can provide a fundamental view on smart money practices. The more your children learn to save, the better they will understand how rewarding it can be to watch their money grow. And putting their savings to use for a big-ticket item they never thought they could afford on their own can serve as a tangible reward for them to work toward.
Financial literacy has been a passion of mine for a long time, and I have tried to teach these concepts to my own children. Starting small with general saving and budgeting habits can lead to financial responsibility, stability, mobility and financial well-being.
Step 3: Prioritize Formal Education
The good news is that formal financial literacy education has already started to gain traction, albeit to a limited degree. The Council for Economic Education (opens in new tab) found that the number of states that require high school students to take a personal finance course increased by 24% from 2018 to 2020. Additionally, just in October, Ohio became the largest to require a financial literacy test for high schoolers (opens in new tab).
The federal government is also getting involved. The Program to Inspire Growth and Guarantee Youth Budgeting Advice and Necessary Knowledge (PIGGY BANK) Act (opens in new tab), is a bipartisan bill introduced in the Senate recently that would create a savings pilot program for high school students to promote financial literacy through practical and experimental learning. This program would boost overall financial literacy and create an opportunity for students to learn how to build stability for long-term financial success.
These programs are critical because there is a direct correlation between them and a strong understanding of the financial skills young Americans need to make good decisions about their money. For instance, young adults who had state-mandated personal finance courses in high school are less likely to make critical financial errors, such as borrowing from payday loan companies, which charge high interest rates, than those who weren’t required to take such courses, according to FINRA (opens in new tab).
You can start now by talking to your kids about money and creating an at-home project. Consider enrolling your child in a local financial literacy program or encourage your child’s school to implement one. And don’t forget to connect with your representatives in Washington, D.C., to let them know you support pending legislation like the PIGGY BANK Act. We owe it to our kids and future generations to step up and drive greater financial literacy so they can achieve financial security and live richer lives.
AAN-0478AO
Craig Hawley is a seasoned executive with more than 20 years in the financial services industry. As Head of Nationwide's Annuity Distribution, Mr. Hawley has helped build the company into a recognized innovator of financial products and services for RIAs, fee-based advisers and the clients they serve. Previously, Mr. Hawley served more than a decade as General Counsel and Secretary at Jefferson National. Mr. Hawley holds a J.D. and B.S. in Business Management from The University of Louisville.
-
-
Legalized Weed Sales Begin in Missouri: This Week in Cannabis Investing
The Show Me State legalized recreational weed in 2022, with sales officially underway as of last Friday.
By Morgan Paxhia • Published
-
Four Steps to Financial Wellness for Black History Month
The small financial steps you take today, such as showing yourself empathy and building credit and savings, can add up to help you create a better tomorrow.
By Aaron Harding, CFP® • Published
-
Four Steps to Financial Wellness for Black History Month
The small financial steps you take today, such as showing yourself empathy and building credit and savings, can add up to help you create a better tomorrow.
By Aaron Harding, CFP® • Published
-
The Impact of Social Security on Divorced Retirement Income
Social Security spousal benefits can quickly get complicated when remarriages and other circumstances are taken into account. Let’s explore some examples.
By Chris Chen, CFP® • Published
-
Are You a Money Moron? Where’s Our Financial Common Sense?
Not to be harsh, but shouldn’t we all have seen this economic angst coming? Let’s get frank about Money Moron Syndrome and how to avoid falling victim to it.
By Neale Godfrey, Financial Literacy Expert • Published
-
Personal Finance Tips for the Year of the Rabbit
Being intelligent like a rabbit by making smart choices about spending and saving, paying attention to details and exercising patience in investing can help increase financial security.
By Marguerita M. Cheng, CFP® • Published
-
Which Charitable Giving Archetype Are You?
Understanding the charitable giving archetype that resonates with you can make it easier to align your giving with the difference you most want to make.
By Catherine Crystal Foster • Published
-
Different Approach to Financial Planning Addresses ‘the Missing Middle’
Nontraditional financial planning model allows you to pay for the expenses you incur between now and retirement — the middle of your life — without losing the ability to build wealth.
By Brian Skrobonja, Chartered Financial Consultant (ChFC®) • Published
-
Thinking of Starting a Business? Tips for Avoiding Failure
Two experts offer some advice on what not to do if you want to succeed (rather than sink) as a small-business owner.
By H. Dennis Beaver, Esq. • Published
-
A Retirement Income Distribution Plan Is as Critical as Saving
Designing a strategy to efficiently use your retirement savings is a critical step on your retirement planning journey to maximize your income and ensure a long-lasting retirement.
By Bradley Rosen • Published