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Learning Financial Literacy at Every Age

April 3, 2023 By: Great Midwest Bank
A grandfather counts coins from a jar with his young grandson.

Nobody is born a financial expert, and our understanding of finances evolves throughout life as we reach different milestones. We quickly come to realize that being wise with money is more than just stashing our extra change in a piggy bank.

Piggy banks are a great place to start, though!

Financial literacy is one’s understanding and skills with a whole “wealth” of money-related topics. It includes knowledge of financial management, setting budgets, investing, and planning for the future.

Let’s walk through the different stages of life and what financial literacy needs should be addressed during each.

[4 Reasons to Use a Piggy Bank]

Teaching Young Children Financial Literacy


It’s important to educate children at a young age to establish a basic understanding of the concept of money. If you have a young kid, take them with you to the grocery store and explain to them what you’re doing when you check out.

That candy they’re reaching for in the checkout line can be a learning moment for them, too. Explain to them while certain things are nice to have, we don’t buy them all the time because we want to save some money for later. Children should be told early on not only what money is, but also that it’s not an infinite resource — that it needs to be managed.

When you have loose change, have your child place the change in a piggy bank. Maybe when there’s enough change in the piggy bank you can use it to buy a candy bar.

[Teaching Children About Money: Ages 4-13]

Elementary Age

When children are of elementary school age, talk to them about what you do in your job to earn money, and what that means. Count change and bills with them to practice basic math skills and familiarize them with money.

Consider setting up an allowance, and how you want to approach it. You may want to tie it to different chores — maybe taking out the recyclables earns $2 and helping out in the garden earns $3. Another option is to give the child a set dollar amount based on their age, for example, one dollar for each year ($8 per week for an 8-year-old). But, perhaps they only get their allowance if their room is tidy and they’ve completed their other responsibilities.

To help kids get a basic understanding of money allocation, split up their allowance into spending money, savings and giving. Instead of using 3 separate piggy banks, use 3 clear jars. That way, kids can see how their funds are growing.

Work with your child on setting goals and saving up money, as well as helping them choose where their “giving” money goes to (such as charities or gift-giving to loved ones). Parents can keep the jars in a safe place, as a bank does.

And while we’re on the subject of banks, go to the bank with your child and open up a bank account for them. Teach them why we have bank accounts and the importance of saving.

Ready to set up a new savings account? We have you covered at Great Midwest Bank!

Middle School Age

When kids enter middle school years, encourage them to earn more money for themselves by doing some pet sitting, babysitting, or yard work for neighbors. The items or experiences they desire may be more expensive now, and having them personally contribute to the work toward reaching those purchase goals is an important lesson. It helps kids prioritize what they really want, and puts into perspective the effort it takes to fund different goals.

It’s also important to help them start understanding the function of credit and debit cards. It should be made clear that cards are another means to pay, and are tied to money you have available in your bank account. That is, while it looks effortless to swipe a card and pay for something, it’s not magic — and should instead be viewed the same way as paying with physical money.

Teaching Teens Financial Literacy

Getting started in the workforce is a great natural progression from earning allowance and doing odd jobs around the neighborhood. Teens who work a part-time job can get a better understanding of the effort that goes into fulfilling monetary goals, while still having parental support to cover their basic needs. To motivate teens to take on a job, parents can make it clear that allowance ends when they turn 16, for example — so they’ll need to find new ways to earn money.

Parents should educate their teens more about banking basics, driving home the importance of making saving money a habit. Teens should also be taught new lessons like budgeting and the importance of building strong credit.

Building Credit

One way to start teaching teens about responsible use of credit is by setting them up with a debit card and teaching them how to use it. Depending on a family’s circumstances and level of trust, some parents also choose to help their teens begin building credit by adding them as authorized users on a credit card. Of course, it’s important to set firm parameters on when the teen can use the card and establish repayment expectations. Teens can also start using their own credit card at age 18 if a financially-qualified adult co-signs.

Preparing for Adulthood

Teenagers should be equipped with basic financial skills before they move out. Adults should help teens prepare for financial independence by outlining the breadth of life expenses and forming a launch plan. This includes tracking spending and budgeting for their wants and needs. Teens don’t know what they don’t know — they likely haven’t had to pay for utilities, groceries, taxes, loans, and so on.

Speaking of which, teens should be educated about how loans work. If they’re headed to college, that means student loans. Beyond that, they will likely need to take out a car loan or home loan at some point in life. So, start them early! Work to provide the teenagers in your life with knowledge of money management, building credit, lending, and financial planning.

Learning Financial Literacy As a Young Adult

Even with a strong foundation of financial knowledge, managing finances in early adulthood can feel overwhelming. At this time it’s important to continue to track spending and form a realistic budget. If one’s expenses aren’t balanced with their income, they’ll need to reevaluate their budget until they figure out a sustainable plan.

College Aged

At college age it’s also important to form debt management plans for credit cards and any loans taken out, such as student loans. Those who are attending college shouldn’t be afraid to use the college’s financial aid and counseling resources. If available, enroll in a personal finance course or two as an elective.

Although individuals at this age may still have access to their parents’ insurance coverage, they should also begin to gain an understanding of medical expenses and insurance so they can factor that into their budget.

In these first years of financial independence, it’s especially important to seek help when needed from available resources such as family members, government entities and campus groups.

[How to Build Credit When You’re Just Starting Out]

Recent Graduates & Young Adulthood

By one’s mid-twenties and thirties, they may be more financially stable and confident. Everyone’s financial situation is different, however, and people should continue to seek financial counseling when needed.

As a young adult, practices like budgeting and spending tracking should be more routine and hopefully feel less daunting. You’ll want to keep working on your debt situation — regularly paying off student loans, car loans and credit card debt.

At this time it’s wise to start thinking more about your finances for both the immediate and distant future. It’s also important to further educate yourself on financing things like a home, vacations and child-raising expenses.

It’s smart to learn more about investment, such as setting up a retirement account or looking into stock investments. Future-you will thank you if you start setting aside money for retirement now.

If you have a partner, establish how your finances fit together. Will you have a joint account, keep separate accounts, or both? If you have kids, consider how to start them on the right financial education foot, too!

[Four Financial Questions for Engaged Couples]

Learning Financial Literacy When You’re Middle Aged

In middle age, you should be working on building your wealth and managing it. However, whether you feel you’re in a good place financially or you’ve been facing some struggles, don’t be afraid to seek financial counsel from time to time. It never hurts to reassess your financial approach.

At this age, it’s important to focus more closely on your retirement plans. If you’ve maxed out your retirement savings, first of all, congratulations! If that’s the case, consider investing in other areas to build additional retirement funds.

While you don’t need to wait until middle age to do so, you should set up a will and estate plan. This ensures your financial wishes will be fulfilled in the event of serious illness or death. It also saves your loved ones the trouble of figuring out how to distribute your assets.

Consider additional insurance such as disability insurance and life insurance as well. Disability insurance protects you financially if you’re prevented from working due to injury or illness. Life insurance will help cover your remaining expenses upon death, which helps protect loved ones from incurring large expenses themselves.

Increasing Your Financial Acumen in Your Retirement Years

When you reach retirement age, thinking about downsizing might be a good option — like moving to a smaller home if you have kids who moved out. This can help free up funds for other necessities.
Form a plan for when you will claim your Social Security retirement benefit. Note that the longer you wait, the higher the benefit amount you’ll receive.

Plan for healthcare expenses and know your coverage options. You can enroll in Medicare when you’re 65. You will also need to consider the different programs available and choose one that best fits your needs.

As with all ages and stages, ask for help when you need it. Wherever you’re at, financial counselors can provide you with financial guidance and connect you with community and government resources.

We’re Here for You at Every Stage

Wherever you’re at in life, our team members are ready to help. Head to your local Great Midwest Bank, and we’ll work with you on your financial needs. Where are you at financially, and where do you plan on going? If you’re new to any process such as setting up a home loan, our experienced loan officers will help coach you along the way. Our goal is to help you experience a state of Bankquility® with any transaction.