Financial literacy checklist for kids

It’s a good idea to periodically take stock of where children are on the road to becoming money-smart. Here’s where my son is at.

I recently came across an excellent Kiplinger article by Janet Bodnar outlining the 10 things every kid should know about money by age 18. Not only do I agree with the items on her list, but it struck me as a great tool to measure what headway (if any) my 10-year-old son, Adam, has been making on the financial literacy front. Below is Bodnar’s list, along with a personal progress report.

1. How to save for a goal:
Check. As I wrote in this post late last year, Adam saved up his allowance and birthday/holiday gift money for months (and even sold some older games) so he could buy his own Nintendo New 3DSXL. It was a huge accomplishment and a major milestone on the road to becoming money-smart. Having said that, now that he’s got that big purchase out of the way, he is still tempted by instant gratification and is more inclined to buy a cheaper game now than to save up for a more expensive one later. I’m perfectly OK with that — especially since he’s the one who will live with (and learn from) the consequences.

2. How to manage an allowance:
Check. See above.

3. They won't get everything they ask for:
Adam knows this because he get everything he asks fordoesn’t. But I wouldn’t say he’s happy about it. In fact, this is the main recurring issue for him about money. He thinks there should be a way for him to earn enough money to buy whatever he wants. Unfortunately, that’s not the way life works — whether you’re a kid or a grown-up. Sure, you can find ways to increase your income but, unless you happen to be Bill Gates or Mark Zuckerberg, there’s always a limit. I hope the penny will drop (so to speak) for him on this point sooner rather than later.

4. How to spend smart:
There’s still some work to be done here. While Adam does try to find out when a desired item is on sale, he doesn’t always have enough cash on hand to buy it while the sale is on — and tries to argue for an advance on his allowance so he can buy it at the reduced price. While I can see his logic, it’s dangerous to go into debt to “save” money — especially when it’s for a want, not a need.

5. How to be generous:
Check. Adam has donated both cash and toys to charities, and he shows his generosity with his friends by loaning or trading games.

6. How to earn a buck:
Not yet. But he’s only 10 — give him some time.

7. How fast money grows:
The concept of compound interest is still a bit advanced for him. We’ll (hopefully) get there before long.

8/9. What it means to invest/How to balance a checking account:
Definite projects for the future.

10. How to stay out of debt:
As I addressed above in point #4, this is a hard one for Adam. But, given that his access to borrowed funds is currently limited to whatever the bank of Mom and Dad is willing to lend him, we’d like to think he can learn this skill before he gets his first credit card.

Keep the conversation going

How are your kids doing on this list? Do you think anything is missing? Post a comment below.


The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.

About the Author

Tamar Satov

Managing Editor, CPA magazine
Tamar is a journalist specializing in business, parenting and personal finance. She blogs regularly in this space with advice and anecdotes on her efforts to raise a money-smart kid.