Financial literacy is one of the most crucial skills a person can possess, providing the knowledge and tools necessary to achieve financial success.
With only 57% of American adults being financially literate, a strong education in personal finance is more critical than ever. An understanding of financial literacy can have a profound impact on children’s future success and well-being, fueling financial independence and thoughtful financial decision-making. In order to achieve this, we must establish financial goals for our children early, by teaching them strategies for success, helping them envision and plan for their future and empowering goal fulfillment.
Teaching children how to manage finances requires more than just a list of rules — it involves instilling a financial mindset. From proven strategies that nurture success to engaging activities, we can uncover the pivotal role parents play in goal establishment and fulfillment. This guide will prepare you to teach your children how to equip themselves for building a financially sound future.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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.
Set goals
Goal setting should include immediate, intermediate and long-term goals to ensure your child learns to continuously set goals throughout their life. Immediate goals, such as saving for a desired toy or a new video game, instill financial responsibility from an early age. This will help foster your child’s understanding of money’s value and cultivate a sense of financial accountability. Intermediate goals, like saving for a musical instrument or an iPad, introduce the concepts of teamwork, budgeting, dedication and responsibility. Achieving these goals boosts their confidence and nurtures a profound sense of accomplishment.
On the other hand, long-term financial goals, such as saving for higher education or a future home, equip children with the tools necessary to build a secure financial foundation for themselves and their future. By helping children set realistic and achievable financial goals that align with their passions and values, we can help instill a sense of personal accountability and motivate their dedication to financial success. Through this, children learn to break down their aspirations into manageable steps, navigating challenges and celebrating milestones along the way.
Build a financial vision board
In a world of screens, the concept of a vision board offers a tangible and creative approach to nurturing financial aspirations through visualizing financial dreams. Children brainstorm various financial goals, bringing their future aspirations into the present. Armed with magazines and printed materials, they select images that resonate with these goals. As they arrange and affix these images to the poster board, the process becomes an act of manifestation.
Furthermore, labeling each image with a corresponding financial goal deepens the connection, prompting questions like: Why did you choose that goal? What steps can you take to achieve it? What challenges might you encounter along the way?
Engaging in discussions about each goal opens the door to insights and exploration. Once the vision board is complete, its display in a prominent place serves as a constant reminder, sparking reflections and reaffirming commitment.
Empower goal achievement
Teaching the art of budgeting is a necessary step to lay the foundation early for how they can one day balance income, expenses and savings. Through this process, children learn to prioritize spending wisely and make informed financial decisions, which fosters responsibility and accountability. Additionally, things like encouraging children to set up a savings account and allocate a portion of their income toward their goals instills discipline. This early habit becomes a cornerstone of responsible money management.
To take their financial journey to the next level, leveraging tools like Invstr Jr, an investing app designed for kids, can be highly beneficial (I am the founder and CEO of Invstr). This app empowers them to define, track and even reward the achievement of their financial goals. It makes the entire process interactive, engaging and relevant to their digital world.
Lead by example
Parents leading by example create a tangible model for their children to follow. When parents demonstrate sound financial habits and share their own financial goals, their children have a front-row seat to observe real-life insights and practical guidance. It is critical to involve children actively in the process of setting goals and nurturing a sense of ownership. This sense of responsibility cultivates commitment and dedication, qualities that are vital in achieving these goals.
Furthermore, equipping children with these strategies and resources enhances their grasp of the financial world. Teaching them about the dynamic force of compound interest, introducing diverse saving methods and demystifying budgeting and investing concepts empower children with invaluable knowledge in personal finance.
A final thought …
Throughout this journey, it's crucial to tailor your guidance to your child's developmental stage. Actively participating in their financial education, parents lay the groundwork for financial literacy, responsibility and skill-building. It's not merely about setting financial goals; it's about cultivating a lifelong connection with money rooted in self-empowerment. The lessons learned today will shape their financial journey tomorrow.
related content
- It’s Time to Let Your Teen Manage Your Family’s Money
- Four Steps for Teens Who Want to Test the Investing Waters
- Are You the Worst Money Role Model for Your Kids?
- Five Things to Teach Your Kids about Money and Happiness
- Four Tax-Smart Ways to Share the Wealth with Kids
-
The Most Tax-Friendly States for Investing in 2025 (Hint: There Are Two)State Taxes Living in one of these places could lower your 2025 investment taxes — especially if you invest in real estate.
-
Want To Retire at 55? See If You Can Answer These Five QuestionsWho said you can’t retire at 55? If you say yes to these questions, you may be on your way to an early retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
One Small Step for Your Money, One Giant Leap for RetirementSaving enough for retirement can sound as daunting as walking on the moon. But what would your future look like if you took one small step toward it this year?
-
This Is What You Really Need to Know About Medicare, From a Financial ExpertHealth care costs are a significant retirement expense, and Medicare offers essential but complex coverage that requires careful planning. Here's how to navigate Medicare's various parts, enrollment periods and income-based costs.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest RatesAs speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
-
This Is How Lottery Winners Build Lasting Legacies, From a Financial ProfessionalWinning a massive lottery jackpot, like the recent $1.4 billion Powerball, requires seeking immediate legal and financial counsel, protecting your identity and winnings and planning your legacy.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your WalletInterest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
I'm a Retirement Planner: These Are Three Common Tax Mistakes You Could Be Making With Your InvestmentsDon't pay more tax on your investments than you need to. You can keep more money in your pocket (or for retirement) by avoiding these three common mistakes.
