Teaching financial literacy to children at a young age may seem like a daunting task, especially when you think about how many aspects there are to financial literacy. Students need a clear understanding of money, wants and needs, and many other things for finances to make sense to them. There are also several key vocabulary terms they need to be taught, as they probably do not hear financial terms used often. However, it doesn’t have to be difficult as long as you have a clear idea of how to teach financial literacy to young children.
Step 1: Make Sure Students Have a Clear Concept of Money
One of the most important aspects to teaching financial literacy at an early age is the concept of money. Students need to understand the value of the different coins and bills. They also need answers to important questions about money, such as, “How do people get money?” and “What are some ways people can choose to spend their money?” Students need to understand that people can choose whether they want to spend or save their money in the real world.
You can ask younger children if they have a piggy bank at home and explain the concept of a savings account and savings goals that way. This will allow young kids to see that there is a connection to their own money. This would be a great time to engage younger kids by asking things like if they get a weekly allowance for household chores. You can also ask what they'd love to save up for—maybe it's a video game or board games. Asking an engaging question like this speaks to potential financial decisions. Will they choose to save for what they want? Setting financial goals, even at a young age, can give them a head start in adapting good money habits and maintaining healthy financial responsibility.
As you can see, gaining a general concept of money is a great way to take a huge step toward students gaining financial literacy.
Step 2: Learn Key Terms
Another huge factor in students learning financial literacy is learning the key terms associated with financial literacy. Young children probably can't define words like income, entrepreneurs, or goods and services because they aren’t words they hear and use in day-to-day life.
My Financial Literacy product includes clear, child-friendly definitions for each of these words and more. It also includes activities where students can apply these new vocabulary terms to real situations that they might encounter. For example, in one activity, students look at various pictures and decide if that scenario shows earned income or a gift. This will be sure to help them better understand larger financial concepts.
In order to become financially literate, young children need opportunities to learn and apply key terms associated with financial literacy. The best way is to start with a clear outline of those terms!
Step 3: Learn Why it is Important to Them
Like any skill we teach young children, students need to know why financial literacy is important to them and their lives. At this point, students probably understand that adults get jobs and then get paid. But what happens after that? Students need to know that in the future, they will get to choose their job. Some jobs provide goods or things to people, while others provide different services. As adults, they will also have to prioritize how their money is spent.
It is helpful to discuss how these things are applicable while they are still kids. Even children can have jobs, such as working lemonade stands or having a classroom job. Moreover, when children receive gifts of money, they have to decide whether to spend or save. Knowing that financial literacy has an application to their own lives is such an important step in helping students become financially literate. We briefly touched on this in step one as well!
Financial Literacy for Young Children Conclusion
All of these topics and more are in my Financial Literacy product! Your students will learn financial literacy and the value of money in a way that is beneficial to them. They can gain important life skills through the application activities in ways that are tailored to their level of understanding. They are already smart kids, but you can feel good knowing you played an important role helping them prepare for their futures while also addressing important math and social studies standards.
I hope you can now confidently explain the importance of financial literacy should you need help explaining a lesson plan or circuit to an advisor or board. Advocating for financial education, even for the youngest children, will give them a good chance at adopting healthy money habits and better money management skills into their teenage years and later into their adult life. Are there fun financial literacy lessons you enjoy teaching? I'd love to hear about them in the comments below!