Back-to-School: 5 Reasons Parents Should Have Kids Take Financial Literacy Classes
Written by
Kerra Bolton
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Daria Uhlig
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Twenty-six states require high school students to take a stand-alone personal finance course as a graduation requirement, according to Next Gen Personal Finance. But at any age, kids reap lifelong benefits from financial education.
“Parents should have their kids take financial literacy classes because it is a crucial life skill that will benefit them in the long run,” said Michael Collins, Chartered Financial Analyst, founder and CEO of WinCap Financial.
“By learning about personal finance, children can develop important skills such as budgeting, saving and investing, which will help them become financially responsible adults,” Collins explained.
With back-to-school season starting, here are five reasons parents should have kids learn how to manage their money.
Understand the Value of Money
Money affects everything from daily expenses and debt management to savings and long-term financial planning. That makes understanding the value of money crucial for sustaining an affordable standard of living and achieving financial goals.
“In today’s society, it is easy to fall into debt and financial trouble without proper knowledge and education about managing money,” Collins said. “By teaching children at a young age, they will have a strong foundation for making smart financial decisions in the future.”
Learn Smart Spending and Saving
U.S. households reached a peak savings rate during the pandemic, which limited people’s ability to go out and spend money. The average personal savings rate in the United States nosedived after March 2021, and after a slight rebound last spring, is again falling. In fact, it declined from 4.8% in June 2023 to 3.4% in June 2024, according to Statista.
Mindy Mercaldo, head of U.S. Branch Network at Citi, said parents should take advantage of opportunities to explore financial concepts that kids encounter in their daily lives. Depending on their age, this can mean budgeting for a treat, or thinking through college financial aid packages.
“A piggy bank strategy can be great for these (young) kids,” Mercaldo said. “I’d argue that teaching kids to spend and save with physical dollars and coins is more important than ever. It teaches them that money is real and not a digital abstraction to be treated casually.”
In addition, parents can encourage kids to divide their allowance into spending, saving and giving, perhaps using three jars or envelopes. This teaches children about the importance of budgeting and prioritizing.
Learn Banking Basics
Early exposure to banking encourages children to develop responsible money habits and build their confidence in banking processes.
“While you may have to set up a custodial account for your child when they are young, opening their own bank account is an important milestone once they are of age,” Mercaldo said.
Mercaldo said she took her daughter to the bank to open her first account when she got her first job.
“She was part of the process, and the banker taught her how to download and use the mobile app to track her balances, demonstrated how to use the ATM and helped her make her first deposit so she could learn how to manage her account.”
Encourage Entrepreneurship
You’ve probably heard stories of early entrepreneurs who first learned to make money by establishing lemonade stands or selling crafts.
While these activities seem simplistic, they also teach kids about earning money, setting prices and understanding profit and loss — skills they’ll need later on as future business owners.
As of 2023, there were are over 30 million entrepreneurs in the United States, according to the Global Entrepreneurship Monitor. That number has been trending upward for almost 20 years, and young adults seem poised to lead the way. A study commissioned last December by Intuit QuickBooks found that Gen Zers were more likely than any other generation to express interest in starting a business.
Give Back
A recent report from the Lilly Family School of Philanthropy at Indiana University projected that nonprofit giving will increase by 4.2% this year and 3.9% next year. That’s good news after years of a growth rate of 1.9% in annual giving.
Factors such as racial and social justice movements, stock market fluctuations and high inflation rates all influence giving rates, according to NonProfitPro. But it’s never too early to teach children the power of giving back to their communities.
“Often overlooked in discussions about personal finance, instilling values of generosity and charity from a young age can greatly impact a child’s perspective on money management in the future,” Collins said.
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