Financial Literacy for Kids: Lessons & Activities

In the current economic state, children are uniquely and considerably impacted by the financial situation of the household. Every struggle represents a valuable teaching opportunity about money, managing skills, and smart decision-making. However, if we want to break the cycle and spare them from financial trouble in the future, we should do better and integrate financial literacy programs for kids in their formal education. 

It’s surprising that we still don’t see elaborate programs on finances in public schools or popular K-12 curriculums, taking into account that financial literacy is an essential skill without which the child will not be able to participate in modern society. 

On top of that, if we consider children’s cognitive development which shows us that kids can grasp basic money concepts already at the age of 3 and have money habits set at the age of 7, it becomes irresponsible and inexcusable to ignore financial topics in early childhood education. 

However, since you’re reading this article, we’ll assume that you already know all of this and share the same concerns. Therefore, let’s head straight to the lessons and activities on financial literacy for kids that you can easily implement in your classroom or homeschool setting. 

The Best Financial Literacy Lessons and Activities for Kids

In this article, we won’t go into the details of what exactly financial literacy is, how to speak to kids about money in general, and when to start because we have a separate article where we answer these aspects of the topic. Make sure to check out the link if you feel like you need more introductory information on how to structure the lessons and what to include. 

However, if you’re simply looking to get inspired with some fun, yet meaningful activities regarding financial literacy for kids, keep reading!

Fantasy Shopping: Making Smart Spending Decisions

One of the most frequent activities kids engage with in kindergarten is role-playing a shopping situation. Many educational institutions even have toys and other accessories that wonderfully represent a market scenario. If you’re homeschooling, you can buy affordable supermarket toys from Amazon to reconstruct a more realistic shopping setting, or simply use the things you have at home. 

Usually, kids play by reenacting their own imagination and experiences, but with a few tweaks, you can use this fun activity and turn it into a financial literacy lesson. 

First, add a price to all the items in the market (assuming the child is already familiar with the concept of money and the different values). Learning Resources have awesome pretend and play money on Amazon that you can use for this activity. Second, restrict your child’s options by giving them a specific amount of money. Finally, make sure the trip to the “market” is goal-oriented, meaning they need to buy specific items for a specific goal. A good example of this would be buying ingredients for baking a cake, making lunch, buying a gift for a friend, or anything else. 

Just with these three elements, you’ll make the game so much more realistic and educational, as you’ll have a lot of opportunities to teach your child about spending decisions, needs vs. wants, money responsibility, money limitations, and even earning money. 

You can always make the activity more elaborate by introducing more restrictions, rules, or elements. For instance, you can give your child more money every “month” simulating a job experience. Also, you can introduce responsibilities, such as paying bills and rent. This will require the child to be more responsible when spending money in the market, and come up with a spending allowance. 

Just like monopoly, you can gamify the activity by rewarding points for every smart decision, or accomplished goal within the limits, which will make this experience a lot more memorable and fun. 

The goal of this activity is to make kids capable of making smart spending decisions by being aware of the value of money and the limitations that exist in our society – nothing comes for free! Knowing that money comes in limited amounts is one of the first and most important things that shapes children’s money habits.  

At the end of this activity, explain to kids the real-world parallels with their fantasy shopping activity and include them in the grown-up process of making spending decisions. If you’re a homeschooling parent, you can take your child with you next time you’re shopping, extending on their lessons learned in fantasy shopping. 

The Earning System: Teaching the Value of Money

In the previous activity, we mentioned ways in which you can address the value of money. Kids need to know that money is limited, needs to be earned, and won’t come easy in life. However, the best way for them to experience how money is earned and understand the work-money relationship is through task performance. Moreover, performing tasks for money or other incentives already fosters a good work ethic. 

However, let us say that this is not an activity that you can practice for a couple of hours because it requires a lot of discipline and effort. Think of it as a weekly, monthly, or even yearly experiment, depending on your specific situation. 

It’s important that you start with a more theoretical lesson before you implement the earning system. Through the lesson, discuss with children where money comes from, how grown ups earn money, and why money is important – what do they help us achieve? If you’ve already played the fantasy shopping activity, then chances are kids would instantly connect their needs and wants with the money they need to get those resources. 

From there, together with the children, develop an earning system through which they’ll have an opportunity to earn their allowance and spend it on the things they like to have. 

The earning system should be transparent and simple, reflecting responsibilities and tasks that children are already expected to perform. As a bonus, you can add additional tasks when kids want to earn additional money to buy that new game they’ve been wanting. 

An example of tasks for which children can earn money include wiring their homework everyday after school, cleaning their room, doing the dishes, mowing the lawn, reading a new book each week, etc. 

We especially love this activity because not only does it do so much for improving financial literacy, developing money responsibility, and good work ethics, but it also allows parents to target specific learning objectives. For example, if you want your child to improve their reading skills, you can monetize reading activities ($xx for every new book they read). If you want to improve their math skills you can monetize math exercises, and so on. 

Practicing Delayed Gratification: Saving and Investing Money

Another lesson in financial literacy is teaching kids about saving and investing money. For very young children, this lesson can focus on simple saving techniques and why it is important to save money rather than spending it all at once, while for older students the lesson should focus on different ways of saving money and a basic introduction to the world of investments. 

The goal is for kids to become aware that they’re not fully dependent on their monthly allowance, meaning their financial management skills and investment decisions can make a lot of difference, too. For older students, the goal is to also develop a sense of how time increases or decreases the value of money through inflation, return rates, and value of acquired resources. 

Let’s start with the younger children and more simple activities for showing the value of saving money. You can do this with a time lapse exercise. 

First, introduce kids to the topic with theoretical information on the importance of saving money. Second, tell them that you’ll play a game, where you’ll “deposit” the same amount of money each month in their account. Then, they have to make a decision how they’ll spend the money that month and how much they will save on the side. After they’ve made the decisions, calculate how much money they’ve spent and how much money they have left. Then, comes another “month” where you give the same amount of money to all students (that money will add on to the ones kids have saved from the previous month). To make things interesting and more realistic, while you simulate the months, make sure to change the prices of the items they want to buy, and randomly add exciting new things, such as tickets to their favorite singer’s concert. Why is this important?  Well, if kids have actually saved money, they’ll be able to afford some of the opportunities that arise in the following “months” as you do the exercise, while those students who’ve spent all the money on immediate rewards, will miss out. 

To make the exercise practical, each “month” should last only a couple of minutes where kids need to decide how they’ll spend their money. Discuss and draw conclusions at the end of the exercise. 

This is a good exercise for older students as well, but since we want to focus on more elaborate concepts, such as investing, it’s better if you focus on math exercises where students can calculate simple interest rates of local financial institutions. It would be even better if they  work in groups and then debate what’s the best way to save money as a student, laying out facts, numbers, benefits, and drawbacks of different alternatives. 

Budgeting Plan With the Help of a Spending Journal

Budgeting is a very important aspect of financial literacy that allows kids to make smart spending decisions by organizing their goals, their income/allowance, and costs in a comprehensive plan.

Since most of the time, financial terminology and the demands it puts on children in terms of responsibility can be overwhelming, the best way to foster the habit of smart spending decisions, long-term spending plans, and money responsibility is through a spending journal. 

What this means is teaching kids how to keep a financial journal where they’ll write their goals, needs and wants, their income/allowance, their spending costs, and forecasts of the accomplishments of their goals. 

On Amazon, there are some amazing budget planners for kids, although you can also create one for your child’s specific needs in a new notebook together with them. 

What does a good budget planner need to include?

• Weekly or monthly page planner which includes:
  • goals (usually one to four) for that week or month. Example: do X bonus assignments around the house for a X% larger allowance this week/month; buy a present for Dad’s birthday; put aside X money.
  • Incoming costs. Example: Dad’s birthday. 
  • Incoming needs or wants. Example: Going to the pool, taking a trip with a friend. 
  • Tables for categorizing and budgeting the income.
• Strategy page – pages where kids can detail their strategy of how they’ll achieve their financial goals. This usually means actions they need to take or restrain from to meet their goals. 
• Savings trackers – a couple of pages at the beginning or end where they update the state of their savings efforts. They can also categorize their savings and put aside a different amount of money each week/month depending on their goals. Examples of different savings include emergency fund, holiday fund, vacation fund, shopping fund, etc. 
• Expense trackers – pages where they write their total spendings for each week/month in different categories. This will allow them to see the big picture – what they spend most on and where they can make some adjustments to meet their goals. 
• Summary and review – pages at the end of each month/year, where kids can write their strengths or weaknesses, their successes or failing to serve them as a reflection and reminder where they need to improve. 

Interactive Worksheets on Financial Literacy

All of the above lessons and activities we’ve shared so far rely on the practical implementation of kids’ knowledge about finances and money. But, how to teach kids about money in theory? 

We’ve already mentioned our previous article titled “How to Teach Kids About Money” where we covered the basics, so here’s another reminder to check out that article! 

In the meantime, let’s discuss some useful worksheet packs that you can use to familiarize kids with some of the aspects of financial literacy before engaging in practical activities. 

Our first recommendation is for the youngest learners. The worksheet pack titled “Counting Money” is the best introduction to the topic. With it, kids will learn what money is, all the important coins and bills used in the US, as well as useful examples of how to count money. The pack features 28 pages including key facts and information and worksheets in three levels – beginner, intermediate, and advanced (4 worksheets for each difficulty level).

In addition to this pack, we also recommend “Subtracting Money” and “Calculate Change (Money)” where kids will learn how to return change or calculate whether they’ve been given the right amount of change while buying things. 

Finally, to get into the details of coins, we recommend “Coin Name & Value” through which kids can learn all the different coin types and their corresponding value, which might get especially confusing for young children. The worksheet pack does a good job, not only in explaining the values, but also describing and showing images of the different coin types which is probably the most beneficial for someone who doesn’t have much experience with money. 

“Whom Do You Buy it From?” Exercise: Teaching About Value and Market

Our final recommendation when teaching financial literacy for kids is this fun and amusing “Whom do you buy it from?” exercise which aims to teach kids about market comparison when deciding to buy something. 

We all know that the price is not always an indication of quality, and even more so, similar or even the same product can have very different prices at different stores. We won’t go into the details of why that is, which is probably a topic worth revisiting with high school students, but rather focus on teaching kids to understand the basics of product comparison before buying something. 

The exercise involves presenting kids with three or four different variations/options of the same resource. Let’s say they want to buy candies. Each option should have a different price, a combination of different flavors, different amounts of candies for the price, and different sellers. Then, simply ask kids: Whom do you buy this from? 

Encourage kids to think deeply about their answer and present reasonable arguments for their choice. To break the ice, ask them the following questions: 

• What option has most of the flavors you like?
• What option is most affordable? 
• Are the prices within your limit? 
• How much have you planned to spend on candies?
• Do you think it is a good idea to pay a little bit more for a lot more candies? Do you really need that much? Is this a way for sellers to make you spend more? How much candies do you need/want?
• Is one option tastier (better quality) than the others? How important is that to you?
• What factors did you prioritize when making the decision? 

All the questions will prompt the child to reflect on their choice and think whether they’re making the best decision by comparing other alternatives available on the market. This exercise is especially beneficial in a classroom setting because kids will witness how other kids think and how different priorities make the “best” decision entirely subjective – there isn’t one best product, but only the best for someone in that specific moment. 

Before You Go

We hope that you’ll find our guide on financial literacy useful and you’ll easily incorporate the lessons and exercises in your classroom or homeschool setting. And, in case you’re still in doubt, we can promise the kids will have a lot of fun, taking away a lot of meaningful experiences from them. 

Beyond that, we invite you to check out our main website and browse through our growing library of interactive worksheets on many different subjects. In the text above, we’ve linked to many of our worksheet packs that you can use when teaching kids about financial literacy, but we have so much more, so make sure you don’t miss anything important. 

Finally, don’t forget to visit our blog, too and subscribe to our newsletter. Each week we release new informative guides with lots of tips and tricks for both teachers and homeschooling parents.