Financial literacy for students

Financial literacy is a crucial skill that should be taught to students at different stages of their development. Parents and caregivers play a key role in introducing budgeting, saving, investing, and debt management. This guide provides age-appropriate financial education strategies from elementary school to college.

• Financial literacy includes skills like budgeting, saving, investing, and managing debt.

• Elementary students can benefit from hands-on learning, such as savings jars, allowances, and money-related games.

• High school students can benefit from managing a bank account, using budgeting apps, and learning about investing.

• College students should take financial responsibility through budgeting, financial aid management, and part-time work.

• Mistakes are learning opportunities, and early financial education sets students up for long-term success.

How early is too early to begin planning for a sound financial future?

“Financial literacy” describes the knowledge and skill set necessary to make wise, informed decisions about money. It’s important to teach financial literacy to students on a developmentally appropriate timeline. Children’s brains are primed to understand increasingly complex financial concepts as they age.

But what financial literacy concepts should students know by high school? What about college? What’s the best way to prepare a young person to live independently, invest wisely, and manage their expenses well? 

In this guide, we’ll provide a framework for the financial skills students should be working on at different ages and stages. Continue reading to discover the financial literacy terms you can begin discussing with your child today.

Financial literacy describes the knowledge and skills necessary for making the best financial choice in a given situation. Those introduced to financial literacy as children understand concepts such as budgeting, saving, investing, and managing debt — and can apply them when it counts.

In essence, financial literacy is the educational foundation that leads to healthy lifelong financial habits.

Financial literacy is one of the most valuable skills for young people to develop. However, it’s rarely emphasized in the school curriculum. 

As a result, caregivers have an obligation to build lessons about finances into their children’s daily lives. Often, they can do so through practical experiences with real money. When genuine experiences are involved, these lessons gain emotional resonance and tend to stick. 

Some of the key financial literacy terms that caregivers should incorporate into this practical education include:

• Budgeting. Creating a plan for how money is earned, saved, and spent.

• Saving. Setting aside money for future needs and emergencies.

• Investing. Using money to generate returns over time.

• Credit. Borrowing money with the promise of repayment, often with interest.

• Debt. Money owed to lenders or financial institutions.

• Interest. The cost of borrowing money or the return on savings and investments.

However, not every child is ready for these concepts at every age and stage. Below, we’ll break down the concepts that can be more appropriate for different grade levels. 

In elementary school, students are just beginning to learn basic money concepts. Over time, you can introduce ideas such as spending versus saving and need-based versus want-based decision-making.

Here are a few ways to introduce these concepts in a meaningful way:

In early childhood, children need concrete visuals to understand complex topics. Consider saving up for something special as a family. It doesn’t have to be a large expense, like a vacation. Instead, consider starting a savings jar for something like Pizza Friday.

Let your child know you need a certain amount of money for pizza and have them help you add a little bit to the jar each day. On Friday, count it up together, go through the menu, and create a budget. This simple exercise makes saving and spending more concrete and tangible for young children.

Financial literacy becomes more practical once children have the opportunity to make decisions about their own money. Offer a small allowance and give your child control over how they spend it. You might want to start with a piggy bank to demonstrate how money “grows” over time, giving them more spending power.

Children learn best through play. For younger children, introduce a toy cash register with play money and introduce financial concepts through pretend play. For older children, you could introduce a game like Monopoly during a game night.

By high school, students may begin working part-time jobs. As a result, they begin to develop a more personal understanding regarding how much their money is worth. This is the ideal time to focus on money management, credit, and financial planning.

Here’s how to impart lessons in financial literacy to high schoolers.

Most banks allow minors to open an account with the help of a parent or guardian. Give your child access to their own banking credentials, checks, and debit card. Begin by monitoring their account with them, you can slowly give them more autonomy over their finances and decisions.

Keep in mind that accounts through the Raisin platform can only be opened by those 18 years of age or older.

There are plenty of budgeting apps that can teach young people how to save toward a goal. Introduce an app and encourage your child to save for prom, a senior trip, or another motivating milestone.

Teenagers cannot set up their own investment account, but an adult may do so on their behalf. Choose a small, manageable investment opportunity, such as a stock, certificate of deposit, or savings bond. This will introduce them to concepts ranging from interest to taxes.

By college, students have an opportunity to truly manage their finances independently. Decisions they make about money gain immediate stakes. From paying college tuition to budgeting for rent, this is the time to develop strong financial habits.

At this stage of young adulthood, caregivers can set students up with tools so they can apply what they’ve learned at earlier stages.

Ensure your college-aged child is involved in filling out financial paperwork related to their education, such as the FAFSA. They should play a role in finding and managing scholarships and grants. This is the ideal time for learning about loan interest rates, repayment plans, and avoiding excessive debt.

Encourage your college student to responsibly pursue opportunities to continue earning income. Consider work-study opportunities on campus, paid internships, side hustles, and part-time off-campus jobs.

In college, the financial mistakes that students can make have comparably lower stakes than they will later in life. An overdraft fee or negative weekly budget is an emotional lesson. Balance support and consequences as your young adult finds their footing in the world.

We have a range of resources dedicated to financial wellness and learning. Visit our banking guides to learn more about developing your own financial literacy.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.