Money Smarts for Kids and Young Adults

How do financially savvy adults get their money skills? Research shows that childhood is a great place to start.

Financial well-being doesn’t mean living the lifestyle of the rich and famous, but instead just controlling your finances, providing a financial safety net for yourself and your family, and meeting financial goals. How much do school kids know about this? And how can adults teach them?

Elizabeth Odders-White, an associate professor with the University of Wisconsin-Madison’s Wisconsin School of Business, conducted a broad review of existing literature from consumer science, developmental psychology and related fields to identify how children can best develop the skills and approaches to become adults capable of managing their own finances.

The review establishes the critical importance of parents and other adults in fostering financial well-being for youth of all ages and suggests specific steps that could improve children and youth’s chances of achieving financial well-being in adulthood—and later retirement.

Financial education tips for kids, by age:

  • Pre-elementary school: Teach kids how to focus despite distractions and help them practice delaying gratification. Distraction and grabbing for gratification are of course two harmful practices for grown-up investors.
  • Elementary and middle-school: Give guidance in basic financial skills and healthy financial attitudes, including learning about savings, frugality and financial planning by observing behaviors modeled by parents and other adults.
  • Adolescents and young adults: Build financial learning through increasing financial independence, supervised engagement with the financial system and experience-based, practical, education programs that teach financial research skills.