April 1, 2022

What Is Financial Literacy, Really?

Financial literacy is important. As much as we hate to admit it, money makes the world go round. Despite this, two thirds of the world is considered financially illiterate.

Why weren’t we taught financial literacy when we were younger? And why aren’t we teaching it to our children today?

It’s been proven that children can start learning basic money concepts from as young as three or four years old. In fact, their financial behaviors and attitudes are pretty much set between the age of seven and nine. That’s because they are constantly absorbing what you say and don’t say, and observing what you do and don’t do. This makes it even more important to not only teach them the financial literacy fundamentals, but to also walk the walk and be a positive role model.

So, the question remains - is it too late for children once they reach the age of nine? Nope.

It’s still possible to influence their financial habits of your kids at any age.

With teens, it does tend to be more challenging.

Financial education starts at home. The sooner you embark on this financial journey, the more impactful it will be.

What is financial literacy, anyway?

Financial literacy isn’t just about money smarts, it’s about developing the behaviors, skills, knowledge, and capabilities that will enable your child to grow into a financially responsible and capable adult.

Behaviors and Skills

At first glance, many of the behaviors and skills taught to kids through financial literacy don’t seem to be clearly linked to money, although they are. They also benefit other areas of your child’s development.

For example, patience is important in all aspects of life, not just for them to learn how to save. Exploring their personal interests is a great way for them to learn about themselves and their passions, but also helps them choose the best suited careers for them in the future.

Identifying potential emergency situations helps them learn how to prepare for one, but also builds risk management capabilities and highlights the importance of saving for rainy days.

The benefits of a financial education reach far beyond money-specific topics. Fostering these kinds of skills early on can help you reap the benefits in all aspects of your child’s life.


When we are learning about something new, we usually start with basic concepts. The same goes for teaching children financial literacy.

What children can learn varies greatly depending on their age.

Between the ages of three and five, children can comprehend concepts, such as needs vs. wants, savings, jobs, giving, and that there are consequences to choices we make. For the ages of five and eight, you can introduce coins and bills, how to set goals, how banks operate, and how to prepare for emergencies.

Once your child is between the ages of eight and 12, new interests and learning capabilities develop. Some of the things you can start talking to them about include how to make decisions, creating budgets, investing, debt, and entrepreneurship.

As they enter into their teens, they can start thinking about what lifestyles they want to have and what they can do to achieve them, what inflation is, impact and social responsibility for businesses.

As your child starts getting closer to the age where they are starting to think about college or university, and going off on their own, it’s important to cover the accuracy of information, marketing, how to manage their accounts, keeping records, contracts, as well as income and benefits from jobs.


According to the National Financial Educators’ Council, financial capability is “[T]he combination of attitude, knowledge, skills, and self-efficacy need to make and exercise money management decisions that best fit the circumstances of one’s life, within an enabling environment that includes, but is not limited to, access to the appropriate financial services.”

That basically means it’s when they can handle, manage, and earn money while making smarter financial decisions. This includes helping children learn how to save, while giving them opportunities to earn, so they can learn what to do with that money.

Allowances and age-appropriate tasks or chores are great ways for them to earn and attach value to the money they are receiving. Once they have their ‘income’, you can give them the opportunity to set up and work towards saving goals, or to put some money into a prepaid card under your guidance, all of which helps them learn how to manage their money.

The benefits of building up your child’s money-smarts extend far beyond their future financial life. The skills and tools they develop will help them grow into responsible adults across the board. Not to mention the short-term benefits of a patient, goal-oriented kid!

So, this Financial Literacy month, start their financial journey with actual real-life experiences incorporated into their day-to-day life.

Get our articles straight to your inbox!
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
By signing up you agree to our Terms & Conditions