How to Teach Your Child Financial Responsibility

We encounter it more often than you might think: adults wishing they would have been better informed in their younger years about the importance of financial responsibility. As it stands today, the average U.S. adult indicates a confidence level of 6.2 out of 10 when it comes to “understanding their finances,” according to Moneyzine. Unsurprisingly, a majority of current high-schoolers, 87%, similarly “admit not understanding their finances.” This, to put it bluntly, is far from ideal. It’s alarming, in fact—especially when you consider that before they know it, most of these high-schoolers will be going off on their own, where significant financial decisions await.

Most parents probably agree that there’s no time like the present to start bucking this trend, but aren’t sure where to start when it comes to financial education for youth. Keep reading for some insights about financial education for kids, including why it’s important and what it should accomplish, as well as how IMCU’s unique SmartStart program (and related initiatives) can lay the foundation for financial responsibility.

Why Is Financial Responsibility Important?

Whether someone is 18, middle-aged, or preparing for their retirement, financial responsibility means a lot, since setting good money habits and making responsible financial decisions can be the difference between a stressful or successful adulthood. On a more practical level, concepts of financial responsibility empower adults to make well-informed decisions in order to save, borrow, invest, and manage their money wisely. Without the proper guidance and education, potential catastrophe could blindside them and leave them in a truly disadvantageous position without the know-how to get things back on track.

What Are Some Examples of Financial Responsibility?

In simple terms, financial responsibility can be defined as “living within your means, regardless of the level of those means,” meaning it’s a broad yet nuanced concept (since “those means” can vary so widely). That being said, some broad, foundational examples of what financial responsibility (in young adulthood) looks like include:

  • Learning to be a responsible account holder.
  • Making a budget and sticking to it.
  • Understanding when it makes sense or is necessary to incur debt, and managing debt appropriately.
  • Establishing and adding to a savings account, as well as an emergency fund.
  • Exploring investment opportunities, knowing how to evaluate them, and building a productive portfolio.

How do these points translate for our youth, though? What does it mean to be a financially responsible child—and when should parents start teaching their kids what they need to know? Let’s explore these questions next.

At What Age Should Kids Learn about Financial Literacy?

Parents can actually start teaching their kids about basic financial literacy concepts earlier than you might assume. In fact, according to a PBS article, it’s really never too early to begin introducing kids to concepts such as the value of money. In no uncertain terms, the author writes that “By age 3, your kids can grasp basic money concepts” (more on this in a bit) and suggests that “many of their money habits are already set” by age 7. 

Of course, it’s worth noting that the concept of “financial literacy” is much more sophisticated than elementary-level lessons in money. But those early experiences are what lay the foundation for the more mature concepts they’ll encounter in the years to come. IMCU’s SmartStart program aims to bridge the gap between learning elementary-level concepts and adapting them to real-life situations. 

What Is the Best Method in Teaching Financial Literacy to Kids?

Ideally, there would be much more teaching money management in schools happening, but as many parents are finding, that’s just not always the case. That means teaching kids about money—and financial responsibility—often falls to the parents. So, where should you start? It’s important to pick age appropriate activities. Let’s explore a few examples:

  • Financial literacy activities for elementary students can include things like introducing the concepts of saving vs. spending, needs vs. wants, setting priorities, and so on. For kids this age, activities should be conceptual and hands-on, more about building a foundation than getting into specific strategies or advanced ideas. You can find fun activities for elementary-aged children via websites such as SmartPath, Lemonade Day, and even the Consumer Financial Protection Bureau (CFPB), where you can sort activities by age/grade level.  
  • When teaching financial literacy to middle school students, you can begin bridging the gap between fundamental concepts and what they mean in the real world. Topics can include the importance of financial responsibility, how to establish good money habits, and how to make more complex decisions. In addition to the CFPB and IMCU’s SmartStart program, you can find extra inspiration on sites like and Schwab Moneywise.
  • When teaching financial literacy to high school students, the primary goal is to prepare young people for their impending adulthood and independence. Unfortunately, there is no federal mandate for financial literacy to be taught in schools. Many do, but the programs vary widely in terms of how sufficiently they prepare students for the future—hence the astounding 80% of American adults who wish their high school curriculum would have taught them more, according to the National Endowment for Financial Education (NEFE). 

Ultimately, the best financial education for young people is one that’s comprehensive, relevant, and hands-on—and this has historically fallen on parents’ shoulders. IMCU has developed programs like SmartStart, as well as offerings like minor savings accounts and Jumpstart credit cards, to help build a strong foundation for financial responsibility.

What’s the Best Way to Teach Your Child Real-World Financial Responsibility? With IMCU (Here’s How)

In addition to some of the tips and resources listed above, the best way to teach real-world financial responsibility is by building up children’s knowledge slowly and introducing real-world responsibility. Working with IMCU’s SmartStart program and Jumpstart credit cards is a great starting point. Here’s what you need to know about these innovative programs:

  • IMCU’s SmartStart program empowers parents to teach their children about being a responsible account-holder. It features an interactive tool that allows parents to incentivize saving, by rewarding children for hitting saving milestones or related accomplishments. And kids can use it to request small, controlled loans when they need a little spending money, which parents can then discuss with them and approve if appropriate. These features help parents to guide their children toward sound financial footing and to improve their decision-making.
  • Jumpstart credit cards are another great option for teaching financial responsibility in a hands-on, real-world setting. These starter credit cards are ideal for young people between 18 and 21 years old, and they come with low credit limits, low introductory rates, rewards for on-time payments, and more. Parents, meanwhile, are able to monitor and manage their account, set spending limits and alerts, and more.

Simply click the links above for additional information about each of these programs, including FAQs, enrollment instructions, and more. If you have any questions, feel free to reach out or find an IMCU branch near you!