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Empowering Youth by Building Early Financial Literacy Skills

Learn how early money habits set the foundation for a successful financial future for children.

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Updated:

December 12, 2025

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You may have heard the saying, "Money talks," which suggests money's power and influence on society. We know that money is an essential need for daily living, often driving our behaviors, but do young Americans know how to manage it effectively? Pew research (2024) reports that only 41% of U.S. adults aged 18-29 feel knowledgeable about handling their finances. These shortcomings present challenges for young adults and families trying to stay financially afloat in today's economy. According to research from the Journal of Behavioral Decision Making (Smith, et al., 2018), children develop feelings about spending choices while they are young that may influence their financial behaviors as adults. So, what should families building early financial literacy skills know about supporting their children's behavioral development?

Early money habits make a difference

Financial literacy plays a vital role in shaping the financial outlook of our youth, helping them navigate the real world and plan for their financial future. When young people learn essential money concepts like budgeting and saving, they are better equipped to face the financial challenges that come with adulthood. The Pennsylvania Department of Education (2025) defines financial literacy as an essential life skill that equips students with the knowledge to manage personal finances, make responsible financial decisions, and understand financial systems. Having foundational skills in money management develops confidence and competence in our youth’s ability to handle everyday financial matters and plan for major expenses later in life, such as purchasing a home. Furthermore, the Pew Research Center (2024) reports that young adults with low financial literacy are more inclined to make poor financial decisions; hence, another reason to build skills early.

Parental influence on money matters

Children learn about the world by watching their parents; the same goes for financial management habits. Smith, et al. (2018) revealed that children as young as five years old had meaningful opinions about spending and saving money. Parents and caregivers play a crucial role in shaping children's attitudes toward money and fostering positive financial habits. Even at a young age, parents can offer activities that improve the youth's financial future, such as reading books with money concepts and saving money in a jar to purchase items. Parents can help their children become financially savvy by:

Modeling appropriate money handling. Children learn the most by observing how their parents use money. Practice thoughtful spending and lay the foundation for a positive financial mindset. Use those trips to the store as learning experiences. If a new pair of sneakers is not in the budget, use it as a teaching opportunity to show them how to save for it.
Having healthy discussions about family finances. Often, money comes up in family conversations in the home. Practice talking calmly about financial matters and avoid having arguments about money in front of children. Provide opportunities for children to weigh in on decisions for the family budget or for things they need or want.
Limiting social media influence. Many people market new products on social media, and teens can be easily influenced by the material things others have. Monitor the content that your children view and limit the length of time that they spend on their devices.

Youth programs offer support

Teaching young people about money builds lifelong skills in responsibility, self-discipline, and independence, which directly apply to life in the real world. Pennsylvania has adopted new academic standards and requires high school students to complete a course in personal finance as of the 2026-2027 school year to graduate. More than half of U.S. states require a personal finance course; you can check your state's academic standards by visiting the Council for Economic Education, Survey of the States. Having these regulations in schools helps close the gap in financial literacy, providing students with a strong foundation for their financial future.

Schools and organizations looking to enhance their financial program offerings should seek support from trusted community sources. Penn State Extension offers a financial and career exploration program called Welcome to the Real World, a 4-H curriculum developed by the University of Illinois Extension and designed to help youth in grades 8-12 manage money and make informed life decisions. The program offers a real-world simulation during which youth make lifestyle and budget choices, grounded in their projected salary. Penn State Extension offers this curriculum as training for professionals serving youth, along with other money management resources, to strengthen financial literacy skills.