Why Teaching Financial Literacy Early can be Hugely, Life-Changing for Kids

Why Financial Literacy Is Important

Why financial literacy is important.

My kids love to spend.

Since discovering the convenience of Amazon over two loooonngg lockdowns ‘add to basket’ has been as common a phrase as ‘Where’s the remote?’ and ‘Mum, you can’t teach’ during homeschooling.

Hmmm… As a qualified teacher, I could see that there was work to be done.
I have been teaching financial literacy skills in the classroom for many years, but truthfully, I hadn’t really brought these life skills home to my own kids.
This past year, it has become pretty clear to me that my own children had no understanding of money, where it came from or its value. (Or, alternatively, they understood how money worked and they had very cleverly played dumb to how much they spent on mum’s phone.) But I doubt it.

I knew something needed to change. These early, impulsive, bad habits of spending too often, recklessly, could easily grow into lifelong money mistakes and mis-management. I needed to begin the journey of teaching my children good money habits in order to develop their financial literacy.


 Teaching Financial Literacy


Until recently, any small savings that my kids did gather from reluctantly emptying the dishwasher or scrubbing the car with a wire brush, were thoughtlessly spent on Lego shipped from Japan or on a doll that pees and burps. (Two very important features apparently).

I had undergone substantial adjustments to my own attitude to money in recent years, having discovered the power of investing and compounding from reading books such as ‘Rich Dad Poor Dad’, ‘I will teach you to be rich’ and ‘Money, Master the Game’. I even brought these learnings to my own classroom over the years, such as delivering lessons on budgeting, investing and the stock market, teaching financial literacy through vocabulary breakdowns and definitions and conquering real life money problems.

And as much as I enjoy, in fact, love teaching these concepts and creating resources to help deliver these ideas, it never really crossed my mind to also teach them at home as my kids were still pretty young. But there is no such thing as being too young.

It was clear, my two money guzzlers needed a little chat…..



Using the analogy of a tree, I explained to my children in simple terms that our money that we earn is ours and we should be trying to keep as much of it for ourselves, for charity or for our future selves. We must always pay ourselves first!
After lots of questions about what their future selves will look like, will the dog be dead and will I have any hair left, I tried to push on to the main heart of the lesson – the importance of investing.


I explained that we can decide to keep our money in diverse ways – each way is better than not keeping our money at all, but some ways are more powerful than others.

Tree 1: I explained that if we keep our money as cash in our new battery-operated safe, fresh off Amazon with special, unique code of ‘1234’, the cash, or their money tree, would not grow. In fact, it is likely to get smaller over the years. (I decided to leave the idea of inflation at this point as they had started to flick each other on the ears to see whose would turn the reddest). I announced ‘Cash was trash’ and moved on.


Tree 2: My children have long been aware that they have an individual cash savings account. My husband and I have been contributing a small amount into it over the years on a monthly basis. It will be their money when they turn 18 to spend as they wish. We are hoping it will go towards college fees as opposed to a combination of some body piercings and eye tattoos. (I am hoping they will have grown out of the current trend of peeing dolls by then).

I reinforced the idea for them that this particular way of keeping money for yourself was a little better than the first as with this ‘money tree’ you are less likely to ‘pick’ at its green leaves, thus allowing it to grow. Although, the ground in which it is planted is not very fertile and its roots are not very deep, it will indeed produce a little. (Again, I made the call not to start into interest rates offered by banks with them at this point, we were haemorrhaging concentration levels).


Tree 3: But the best way to grow our money tree is to nourish the seed, plant it deeply and surround it with fertile nutrients and water it regularly. Establish firm roots and your tree will provide for them for the rest of their years. Money needs to be INVESTED in either something or a variety of things.

Now, trying to explain the Stock Market to two children under 10 isn’t exactly easy, but I gave it a go. I told them that I had started to invest their monthly money in the stock market, which is a little like Amazon in that it is filled with all sorts of things that they can choose to buy and now they own a small piece of all this ‘stuff’.

It wasn’t my best work. This wasn’t going well.


Like all sensible teachers, knowing when to bring things to a close, is a skill. I could see four very red ears and two small faces delighted, actually thrilled that they believed they owned Amazon, and in a way, they do as I have invested their money into Index Funds that do include the blue chip greats such as Amazon, Facebook, etc.

So, I let it go.

Concluding with investing in people, innovation, technology, ideas, imagination is investing in their future. Human kind will always move forward and excel in new areas and develop further in the well-established ones.

Their money tree has been planted early, deeply, nurtured with dollar cost averaging strategies and will grow exponentially for the remaining 50/60 years. Or maybe even a little longer. It will be strong against the inevitable winds, storms and tornadoes that will of course come, but their tree is diversified and strong through all seasons.

Click here to shop for Stock Market Resources for your kids!

See also my 5 top tips on how best to teach the Stock Market to your kids! 

See here for a super Stock Market simulator for kids. 



The importance of developing financial literacy early is key to a lifetime of confident money management. It should be focused on more in schools, talked about freely at the dinner table and put into action from elementary levels. There is no escaping the mathematical fact that the earlier children invest in a pension or individual savings account the more AMAZING the power of compounding hits.

There is also no escaping the fact that the children who are included in conversations about money, taught about taxes, savings and investing, encouraged to earn and appreciate money early, grow up to be much more efficient with their budgeting skills in the future.


In my classroom, I use my resources to bring the world of money alive. It is not something that is ‘rude’ to talk about. We learn how to budget for a family, invest in the stock market, create and design businesses to help move from employee to employer, buy a home and furnish it and quite simply understand how to navigate real life money problems. I teach my students and now my own children how money can give us freedom to do what we love, provide a lifestyle of great joy and how to contribute to causes close to our hearts.

It’s never too early, so let’s teach them that although a good work ethic is important and indeed, vital, we don’t always have to work so HARD, let our money work for us!

Click here to shop Emerald Money Studios ‘Financial Literacy Resources’ for kids!

Related Posts