Financial literacy is a vital skill that can help children grow into savvy adults and introductory books for kids can help you teach your children about finances. Unfortunately, studies indicate that many children do not learn the necessary skills to become money smart in adulthood. One study of 15-year-olds found that 18 percent had not learned basic financial skills such as setting up a budget. In contrast, another survey found that 73 percent of youth were unable to calculate interest rates or define the concept of inflation. Therefore, parents are in an excellent position to begin teaching their children the fundamentals of financial literacy, thus setting them up for future success.
The Significance of Making Kids Money Smart
Although the ability to save is important, making kids money smart has an array of other significant advantages. It will help them avoid scams and predatory lending practices later in life and make it easier for them to spot good deals and sound investment strategies. Financial literacy will also ultimately help children understand their workplace benefits. Additionally, teaching children about money will set them up to understand how to build good credit as adults. All of these skills will ultimately help children grow up knowing how to:
- Avoid unnecessary debt
- Build good credit
- Calculate interest
- Identify good investments
Introductory Books to Teach Kids About Money
While modeling good financial behavior is an important step in teaching kids to be money smart, there are many other ways parents can help their children learn these valuable skills. Introductory books for kids are an excellent and relatively easy way to begin teaching financial literacy. To help you sort through the many options, here are five excellent books to start with.
Heads Up Money
“Heads Up Money” by Marcus Weeks is aimed at slightly older kids, beginning at grade 5 and continuing through high school. This book is ideal for curious kids and teenagers who tend to ask a lot of questions. Rather than focusing on one concept, “Heads Up Money” discusses an array of unique and fascinating questions that will have kids eager to learn more.
This book is split into five sections: Show Me the Money, What’s It Worth, Does Money Make the World Go Round, Can Money Buy Happiness, and What’s in My Pocket. These sections focus on everything from cryptocurrency to hyperinflation. It answers questions such as “What would happen if a bank simply printed more money?” For anyone looking for a well-rounded and fascinating introductory book for curious kids, “Heads Up Money” is a great place to start.
If You Made a Million
Slightly younger children may be more intrigued by “If You Made a Million” by David M. Schwartz. This introductory book is aimed at kids between the ages of 4 and 8 who are just beginning to learn money smarts. Rather than discussing financial facts in a straightforward way that may become boring to younger readers, “If You Made a Million” introduces a playful character called Marvelosissimo the Mathematical Magician to help explain fundamentals such as investing, earning money, and earning money interest, and cashing checks. Although it was initially published in 1989, it has continued teaching kids money smarts well into the 21st century.
How to Turn $100 Into $1,000,000: Earn! Invest! Save!
This book is written by James McKenna, Jeannine Glista, and Matt Fontaine, better known as the creators of the iconic educational show “Bill Nye the Science Guy.” Designed for kids ages 10 – 14, “How to Turn $100 Into $1,000,000” focuses on teaching children how to begin accumulating wealth. It is comprehensive without being dense, and it explores everything from writing resumes and finding a job to creating a savings account and taking advantage of compound interest.
Your child may already be a fan of the Ninja Life Hacks series — and if they haven’t heard of it, this introductory financial book is an excellent place to start. Written by Mary Nhin, “Money Ninja” focuses on teaching three fundamental skills:
For younger kids aged 3 – 11, this book is an excellent introduction to basic fundamental money skills.
More Money, Please: The Financial Secrets You Never Learned in School
Finally, older teens getting ready to venture out on their own will likely learn a lot from “More Money, Please: The Financial Secrets You Never Learned in School” by Scott Gamm. Gamm is known for founding the financial website HelpSaveMyDollars.com when he was just 17 years old, a move that launched him into the spotlight as a financial news commentator. This comprehensive guide dispenses various financial knowledge vital to teens and young adults about to leave home. A few areas of focus include:
- Sticking to a budget
- Building credit
- Managing student loans
- Saving for retirement
Other Ways to Invest in Your Children’s Future
Teaching your kids to be money smart is imperative in helping them achieve financial success in adulthood, but there are other ways to begin investing in your children’s future. These include:
- Purchasing a U.S. Savings Bond
- Opening a basic savings account
- Setting up a Custodial Roth IRA
Perhaps one of the best steps you can take, however, is to set up an investment account for your child. An excellent option is the UNest app, designed specifically for parents to begin saving for their child’s future goals. This tax-advantaged investment account is a flexible and customizable way to save for a range of goals, including:
- First car
Your UNest account can also be more general to give your child financial security in adulthood. UNest originated after the realization that parents needed a more flexible way to save for their child’s future. Since every family is different, this account does not utilize a one-size-fits-all approach. Instead, they offer five different setup options — including age-based — to enable families to customize the account to suit their unique situation.
Parents can establish various automatic deposits to maintain a steady investment schedule and plan for the future more efficiently. Additionally, parents retain control of this account until the child reaches adulthood. It is also possible for friends and other family members to contribute to the account to grow the investment fund even more quickly. Thanks to the fact that UNest is tax-advantaged, parents can also receive up to $2,200 in tax benefits annually.
Teaching your child financial literacy sets them up for success in adulthood as they begin navigating investments, credit, loans, and budgets. By modeling good financial behavior, investing in your child’s future, and reading introductory financial books, you are well on the way to making your kid money smart.