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  • Writer's pictureCedric Davenport

The Importance of Financial Literacy for Children and Teenagers

Financial literacy for children in today’s age cannot be understated. Read on to learn the importance of this essential bit of knowledge for today's youths.

To many Americans, the idea of teaching their children (or even themselves) about money is a foreign concept. Some parents might not know how. Other parents might be too lazy. And then, some parents might think it’s not even necessary.

“I wasn’t taught about money when I was a kid, and I turned out alright!” they might say.

According to a CNBC survey, 64% of Americans are paying monthly expenses beyond their means. This usually involves incurring credit debt or spending money they don’t have. And many of them don’t even give it a second thought.

But this problem might have been avoided if they had been educated about money when they were younger, preferably as teenagers. Even more preferably as children.

If this were the case, they could have developed good habits that would have carried on into adulthood. This article will explain why it’s important to start teaching your child early about finances.

Good (and Bad) Habits Start Early

One important reason why America is a great country is because it’s possible to live the kind of life you want.

But it’s also possible (and even likely) that you could be forced into a type of life you don’t want because you made the wrong financial decisions in the past.

The reason why people make poor financial decisions as adults is because they had bad money habits in the past.

But there’s good news! If the above statement is true, then the opposite must also be true.

Back in 2012, an experiment was conducted where students were given access to a finance-related theme park. They were asked to create a household budget based on fictitious, although common, money-related situations.

Some students took a financial literacy course before being given access to the park. Results showed that the students who took the finance course greatly benefited from it. They practiced delayed gratification, made better financial decisions, were more frugal, and relied less on credit.

This research shows that not only can young students benefit from a financial literacy course, but they are also fast learners and can absorb the information quickly (the course described above was about 19 hours long).

But you don’t need to go to a theme park to have your child or teen start practicing good money habits.

For example, you could give them an age-appropriate allowance where they are told to save about 10% of what they earn. Give them a goal to work toward so they can get that video game or fashion item they’ve been drooling over for months. They would have to work hard to get it, and that makes all the difference.

This brings us to the next topic…

Instant vs. Delayed Gratification

As stated before, most Americans are living paycheck to paycheck. This means that they spend most if not all of their money as soon as it hits their account.

There is not much forethought, and that’s the problem. Americans want that shiny new thing RIGHT NOW.

Not tomorrow.

Not two months later.


Instant gratification has permeated American society very deeply. Video games, Twitter, Youtube, Netflix, and Amazon Prime are just some examples. You can have almost anything you want without having to wait for it.

Because of this mindset, many people wouldn’t save their money even if the benefits of doing so were explained to them. But the reason for this is because Americans are not taught the concept of delayed gratification.

Delayed gratification means postponing immediate pleasure for larger, more rewarding benefits in the future. It sounds like an excellent concept, but truthfully, it is a skill that has to be learned and practiced.

And there is no better time to teach this concept than to children when they are young.

Young people need to understand that there is a difference between a want and a need. Usually, we focus on wants, and that’s okay from time to time. But doing it too much can lead to bad decisions that could be very difficult to correct.

Children and teens don’t have to wait until they are adults to learn about delayed gratification. They can learn to be patient at a very young age. They can learn that they can have the life they want. But it will take time, sacrifice, and a delay of immediate pleasures.

And finally…

Financial Literacy is a Parent’s Responsibility

Based on a 2010 article, studies found that parents had a significant influence on their child’s financial behavior and attitude.

Children will copy the attitude of their parents, for better or worse. Kids do not have an intrinsic need to be concerned about their future. They need to be taught to think about their long-term goals.

As we all know, reality is going to hit them in the face eventually, and they need to be ready for it. Life can get REAL very quickly, especially when it comes to emergency financial situations.

But it starts in the home.

You can’t expect your children or teens to look towards their future if you are not doing the same. Your children will model your behavior. “More is caught than taught,” as the saying goes.

There are lots of things you could do to begin. When you go grocery shopping, you could explain to your young child why the prices of certain foods matter. Distinguish between the food that you NEED to eat and the food you WANT to eat. That way, they can learn to distinguish between buying items that are a necessity and the ones that would only satisfy a short-term pleasure.

Perhaps an even better idea is to get them to invest in themselves. When they are teenagers, have them save money for a new computer! They can then take pride in the fact that they paid for something that will actually benefit them. As a parent, allow your children to invest in their own future.

But you should do the same.

You could start investing and explain the process to your children and teens. Talk about how you save a small percentage of your income every month. If it’s important to you, it will become important to them as well.


Here at Tired Mama Resources, we are dedicated to giving you REAL information to benefit you and your children.

The topics of financial literacy and delayed gratification are rarely spoken of today, and yet they are vital for your child’s future financial freedom.

It’s never too late to start educating your children on money matters. Get started today! Your children will thank you once they’re older!

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