Why You Need to Teach Your Kid Financial Literacy Today
The 7 pillar framework to help your kid learn the value of money…and time
I recently tried paying cash for ice cream cones.
It was a relaxed Sunday afternoon, and my (young adult) kids and I decided to treat ourselves at a small country dairy shop. We picked our flavors—mint chocolate chip x2, double chocolate, and rocky road, some in waffle cones.
Then, I reached for my wallet and handed over actual cash. The college student behind the counter froze, staring at the bill like it was an artifact from another era. She hesitated, clearly unsure how to handle this ancient form of payment.
To make things trickier, her register stalled out, failing to calculate the change. She stood there, staring down at the tray of coins, struggling to piece it together. I offered the amount to be helpful, but even then, she stumbled over counting out the right change.
We made it through—painfully. I dropped the change into the tip jar, thinking, “So they do know some people still use cash!”
Yes, this is a story about payments, not finances… but it points to the bigger picture.
She was a college student who presumably is adept at using Venmo and any number of other digital payment services. But the digital world makes money remote. It turns it into numbers on a screen that often feel like they aren’t quite connected to real life.
Transactions feel like play. Credit is easy to come by. Spending with digital currency takes seconds, and we don’t feel the difference that previous generations felt when buying something in cash and being handed back the change. The physical reality is less obvious.
This is all the more reason to teach our kids, from an early age, about money.
I don’t mean just about the nuts and bolts of making change. Or even the nuts and bolts of how banking, insurance, taxes, and interest work (though these are vital). I mean how to think of and understand money and the exchange of money for value.
Teaching your kid financial literacy from an early age isn’t just about learning how to manage money. It's about helping them learn the mindset and skills necessary to use money wisely.
This takes practice. Not on-paper practice, real-life practice of experiencing what happens when…
By focusing on the 7 pillars—
Earning
Saving
Spending
Investing
Risk and Reward
Value for Effort
Financial Goals
—you can help your child develop a deep understanding of how money works.
And, more importantly, you can help them learn how to think about money wisely—in a way that leads to lifelong financial independence and success.
Why financial literacy is essential for kids (not just adults)
Teaching kids the concept of value exchange from an early age helps them learn critical thinking skills, independence, and confidence.
It teaches kids common sense and practical thinking.
This means later when they’re faced with decisions that have bigger consequences—taking out loans for college, saving for car payments, renting an apartment, investing in their future—they have the critical thinking and financial nuts and bolts tools to make better choices.
*SIDE NOTE: This is admittedly a big topic… and a long post. I’ve tried to make it as skimmable as possible so you can get an overview and dip in where useful.
The 7 pillars approach will help your kids learn how to make good choices, not just the nuts and bolts of how the financial system works.
It’s different from how financial gurus teach financial literacy
Most financial gurus and courses stick to the basics—the mechanics of managing money. They focus on teaching step-by-step skills: budgeting, saving, investing, managing debt, and understanding credit. It’s practical, yes, but it often feels like a list of isolated tasks.
Their approach tends to break financial literacy into separate, topic-based units. You learn about budgeting one week and investing the next, but there’s little emphasis on how all these pieces fit together.
And while they aim for quick wins or tips for financial freedom, they often miss the bigger picture—the mindset behind making smart financial choices. It’s more about the 'how' and less about the 'why.'
In contrast, let’s look at an overview of the 7 pillars approach:
Why the 7 Pillars of Financial Thinking Is Effective
Mindset-Centered Framework: This approach places a heavy emphasis on developing a mindset around money—how to think about earning, saving, spending, investing, and financial goals. It encourages kids to internalize financial principles as part of their decision-making process rather than just learning isolated skills.
Integrated, Holistic Learning: Instead of treating financial literacy as a series of separate topics, this approach integrates all aspects into a cohesive mental model. This holistic view helps kids see how financial decisions are interconnected, making it more likely they’ll understand the why behind their choices.
Focus on Value and Long-Term Thinking: By emphasizing concepts like value for effort, goal setting, and risk/reward, the 7 Pillars Thinking teaches kids to approach money with a mindset geared toward long-term success, resilience, and adaptability—skills that are often overlooked in standard financial literacy approaches.
Application to Life Skills Beyond Money: This framework doesn't just teach kids about managing money; it helps them develop critical thinking skills, problem-solving abilities, and an entrepreneurial mindset. This broadens the impact of financial literacy to encompass life skills that are transferable across many areas.
This approach helps kids develop a deep, intuitive understanding of financial literacy that they can carry into adulthood. It’s a mindset-driven foundation that integrates life goals, values, and effort into how we think about money.
Here’s what the 7 pillars do:
Help Kids Understand How to Earn Money – Teaching kids about earning helps them appreciate the value of hard work, effort, and skills. They learn that money isn't simply given but is the result of providing value, whether through a job, chores, or entrepreneurial ventures.
Instill the Habit of Saving Early – Financial literacy teaches kids the importance of saving for future goals and emergencies. It helps them build a mindset of delayed gratification and financial security, which leads to better money management as they grow.
Teach Smart Spending and Budgeting Skills – Kids need to learn how to make wise spending choices and differentiate between needs and wants. This helps them avoid impulsive purchases, understand the importance of budgeting, and make informed financial decisions.
Introduce the Power of Investing and Growing Wealth – By understanding investing, kids realize that their money can work for them. They learn the value of investing in themselves, their education, and even financial markets, setting the foundation for long-term financial growth.
Prepare Kids for Life’s Risks and Rewards – Financial literacy helps kids understand that every financial decision carries potential risks and rewards. They’ll be better equipped to handle real-world challenges like borrowing, understanding interest rates, and managing financial risks responsibly.
Appreciate the Value for Effort – Learning financial literacy teaches kids that the effort they put into earning money should be reflected in their spending choices. This understanding fosters a strong work ethic, an appreciation for hard-earned money, and the discipline to make value-driven decisions.
Help Kids Set and Achieve Financial Goals – Kids who learn financial literacy are equipped to set and work toward financial goals, whether saving for a toy, a future trip, or even college. This skill builds responsibility, planning, and long-term thinking, setting them on a path to financial independence.
The 7 Pillars, Metacognition, and Mindset Thinking
We need to teach kids how to think about their financial decisions so that they go from being financially literate to financially wise.
It’s a lot. But it’s fundamentally important. It’s the mindset shift that helps kids develop lifelong skills.
Detailed Breakdown of Each Pillar
Earning Money
When I was a kid, getting paid to mow the neighbor’s grass or water their plants was rewarding.
I had physical, tangible money of my own that I could choose what to do with. It was empowering to know that I could earn it through my own efforts that someone else saw as valuable.
Earning gives kids a sense of accomplishment and independence. It helps them grasp the fundamental exchange: value for money.
What it is: Understanding that money is earned through effort, skills, or providing value.
Related Topics: Entrepreneurship, jobs, and different ways to generate income.
How to teach it: Chore systems, small entrepreneurial projects, and job experiences.
Saving Money
Teaching kids about saving money is really teaching them about delayed gratification, planning, and goals.
Like almost every kid in my generation, I had a piggy bank as a kid. I periodically emptied it to check if I had enough money to buy the object of my current desire—usually a game or project kit. Having to save made me aware of the work I was exchanging for the item and whether or not the item was worth the price.
What it is: The importance of putting aside money for future needs and goals.
Related Topics: Banking basics, interest, compound growth, and emergency funds.
How to teach it: Opening a savings account, matching savings, and setting savings challenges.
Spending Money
Spending is probably one of the most valuable lessons kids need to learn.
Our parental instinct might be to tell kids that saving is the best option. We do this because we think that kids will spend on objects. I did.
But spending—putting money into play—on tools, education, skills, or resources to attain a bigger goal is investing, the next pillar. And we need to teach kids the difference.
What it is: Making informed decisions about using money and balancing needs vs. wants. Knowing when putting money ‘into play’ is more valuable than saving it.
Related Topics: Budgeting, credit vs. debit, and distinguishing between necessary expenses and luxuries.
How to teach it: Budgeting, involving kids in shopping decisions, and teaching them to prioritize.
Investing Money
My son learned this skill through endless rounds of Monopoly. He studied it like one doing a science experiment.
We used to joke that he was a big spender because, at the start of every family game, he would buy up property and put houses down on it faster than anyone else.
The difference was he was spending as an investment in something bigger—a recurring return on his money. He went rogue and cut deals with other players. He offered more money upfront to buy other players’ properties. Spending to create investments with high ROI.
We used to joke that he had extraordinarily good luck, and it was this that allowed him to win every game.
But then we played a game and his luck turned. Nothing went his way. He started losing money, property and had to mortgage some of his properties. We were secretly (or not so secretly) excited about the possibility that another family member might win this particular game of Monopoly…until he started making deals.
He leveraged all options he still had and made deals with all other players…to gain recurring returns.
Guess who won? Yeah—he did.
He learned the power of investing—not just in an asset (think stocks), but in oneself and one’s skill set. Guess who has a successful company as a young adult? Yup. He does. Partly luck. Mainly smart investing in people, skills, and relationships.
What it is: Using money to create more value over time and investing in oneself.
Related Topics: ROI, stock market basics, interest and compounding, and investing in education or personal development.
How to teach it: Stock market games, investing in education, and discussing the power of compounding.
Risk and Reward
Helping kids experience risk and reward by letting them handle their own money, making low-stakes choices with it, and experiencing the consequences is powerful.
If your kid is old enough to count money, they are old enough to test out spending, risking, and evaluating if their purchase or investment was worth it. Learning from experience is more valuable than any amount of theoretical learning.
Say your kid earns $X for each time they mow the lawn, then saves up $10X to buy the shiny object of their dreams. They might be thrilled and feel the cost was worth 10 rounds of mowing the lawn (probably an entire summer’s worth of effort). OR they might regret it once they have the shiny object. Either way, it is a valuable lesson and worth every penny.
I remember counting out five nickels to buy a $0.25 packet of gum as a kid in the early 70s. Sounds like nothing today. But those five nickels were money out of my piggy bank for something I wanted. Something I decided was worth it.
What it is: Understanding that every financial decision carries potential gains and losses.
Related Topics: Credit and loans, insurance, understanding financial risks, and rewards.
How to teach it: Games that involve risk, discussing real-life financial decisions, and explaining borrowing and credit.
Value for Effort
We tend to think about salaries and the cost of living. These are the nuts and bolts aspect.
But what we don’t focus on teaching kids is the underlying, fundamental exchange: value for effort.
Money is a symbol of the value we place on effort. Whether it is a tangible product or a service, the core is the effort (work + time) that was put into the service or into making the product.
The way to think about this is what effort we are willing to put into something and how we value our effort.
A salary is a reflection of value for effort—at a flat rate.
An entrepreneur thinks about effort and time as an investment. They spend both to achieve (hopefully) increasing returns on that investment—at an increasing rate.
Value and effort look different in different circumstances.
Teaching our kids how to think about this by giving them real-life entrepreneurial practice is empowering. It’s the fastest way to help kids intuitively understand how it works.
What it is: Recognizing that effort should reflect the value of money earned or spent.
Related Topics: Taxes and deductions, charitable giving, and appreciating the value of hard work.
How to teach it: Paying for quality work, discussing the value of hard work, and sharing real-life stories.
Financial Goals
If your kid has real-life experience with tangible money--earning, saving, investing, valuing it, and risking it—they will develop an intuitive understanding of how to use it.
They will gain low-stakes practice over the years and learn how to think about it on a practical level. They will be able to define financial goals at a much younger age, not so much because they’ve studied the nuts and bolts of financial literacy, but because they’ve had personal experience using it and understanding the mindset of it.
Money is a tool, after all. We can save it, put it to use, invest it in our future, do good with it, or lose it. But kids need to have both the nuts and bolts grasp and the practical experience to have the savvy to set financial goals worth setting.
What it is: Setting financial goals and working toward them.
Related Topics: Short-term vs. long-term goals, financial planning, tracking progress, and aligning goals with values and priorities.
How to teach it: Creating vision boards, setting short- and long-term goals, and tracking progress.
Takeaways
The 7 Pillars of Financial Thinking give your child more than just knowledge and literacy about money—they help your child develop a mindset that leads to lifelong financial independence, confidence, and wisdom.
By teaching your kid how to think about earning, saving, spending, investing, risk and reward, value for effort, and financial goals, you’re giving them tools that will set them up for life.
Learning these principles through real-life, low-stakes experiences and games in childhood helps kids gain financial literacy and financial wisdom.
They will better understand what matters to them, why it matters, and how to invest in their future.
Start today using both games and real money in exchange for their work. You can help your kid start a small business and experience the meaning of value and effort for themselves.
Start incorporating these pillars into your child’s life now and watch them develop the skills and mindset they need to become financially savvy and independent.
They will be the wiser for it. And you’ll be amazed at how quickly your child begins to think about money in a whole new way.
Practical Tips for Parents to Integrate the 7 Pillars into Everyday Life
1. Earning Money:
Set Up a Chore System or similar: Create a list of age-appropriate chores with assigned payment amounts. This helps kids understand that effort leads to earnings.
Encourage Entrepreneurial Activities: Support them in running a small business like a lemonade stand, craft sales, or dog-walking. Help them track their earnings and expenses to understand profit.
2. Saving:
Open a Savings Account: Start a savings account or a piggy bank where kids can deposit a portion of their earnings. Show them how their money grows over time.
Create a Savings Challenge: Encourage them to save for a specific goal (e.g., a toy or game) and track their progress. Match their savings to reinforce the habit.
3. Spending:
Teach Budgeting with Real Money: When giving them their allowance or earnings, have them divide it into categories: spend, save, give, and invest.
Involve Kids in Shopping: Let them compare prices, make choices about what to buy, and pay for items to practice spending wisely.
4. Investing:
Introduce the Concept of Investing in Themselves: Help them set goals related to learning a skill or taking a class, explaining how investing time and effort now will bring future rewards.
Use Real or Simulated Stock Market Games: Open a simple investment account or play online investment games together to help them learn about how investing works and the power of compounding.
5. Risk and Reward:
Teach About Consequences: When they make a spending choice, talk about the outcomes—what they gained or lost—and how they might approach it differently next time.
Play Games of Chance and Strategy: Use board games that involve risk and reward, like Monopoly, to help them understand that every financial decision has potential outcomes.
6. Value for Effort:
Pay for Quality Work: If they do a chore, pay them based on the quality of their work. Discuss how greater effort results in higher value and more rewards.
Discuss Real-Life Examples: Share stories of people who worked hard to achieve their goals, highlighting how effort and perseverance lead to success.
7. Financial Goals:
Create a Vision Board: Have your child make a board of things they want to achieve, save for, or buy. This visual representation helps them connect financial planning to real-life goals.
Set Short- and Long-Term Goals Together: Encourage them to set both short-term (saving for a toy) and long-term (saving for a trip) goals. Discuss how each of the other pillars supports reaching these goals.
Bonus Tips for Daily Integration:
Use Real-Life Situations: Involve kids in daily financial decisions, like planning a family budget for an outing or explaining how bills work.
Discuss Money Mistakes: Share age-appropriate stories about financial mistakes you've made and what you learned, teaching them that it's okay to make mistakes and learn from them.
Model Financial Behavior: Show your child how you budget, save, invest, and make spending decisions, demonstrating that financial literacy is a lifelong skill.
Board Games and Online Games That Teach Kids About Money
Board Games:
Monopoly (Classic and Junior Editions) – Teaches kids about real estate, managing money, handling transactions, and making investment decisions.
The Game of Life – Introduces concepts like earning salaries, paying taxes, taking out loans, and managing unexpected expenses.
Payday – Helps kids understand budgeting, saving, and handling monthly expenses while navigating unexpected financial surprises.
Money Bags: A Coin Value Game – Teaches younger kids about counting money, making change, and understanding the value of coins.
Cashflow for Kids– Introduces basic concepts of investing, passive income, and financial decision-making.
Allowance Game – Helps kids learn to budget their allowance by saving, spending, and making change.
Buy It Right – A shopping-based game where kids practice buying, selling, and making change, helping them understand the concept of earning and spending money.
Exact Change – A card game that teaches kids how to make change and count money quickly.
Online Games:
Financial Football– Combines a football game with financial literacy questions for ages 11 and up, covering topics like budgeting, saving, and investing.
Practical Money Skills' Peter Pig’s Money Counter – For younger kids, this game helps them recognize coins, add values, and practice saving money.
Savings Spree – Teaches kids about earning, saving, and spending while making decisions about needs vs. wants.
Lemonade Stand – An online simulation where kids run their own lemonade stand, teaching them about pricing, supply and demand, and profit/loss.
Wise Pockets – Offers various money-related games and stories for kids, covering topics like earning, spending, saving, and borrowing.
Bankaroo – A virtual bank for kids where they can manage their allowance, save for goals, and learn about budgeting in a fun way.
Rich Kid Smart Kid – Provides multiple games that cover basic money concepts, entrepreneurship, and investing.
Did you make it through? Congrats! If you want to chat or learn about my homeschool coaching services for parents, get in touch. I’d love to hear from you.