12 Expert-Backed Strategies to Encourage Financial Literacy in Students

As educators, it’s never too early to start teaching our students the value of financial literacy. 

With the growing number of young adults who are facing financial struggles, it has become more critical than ever to educate our students about sound financial practices. 

And while some schools are now including finance education in their curriculum – Utah became the first state to mandate this in 2008 – there are still many that have yet to do so.

But you don’t need mandates to make an impact. In this blog post, we will cover 12 expert-backed strategies to encourage financial literacy in your students.

What Are the 5 Key Components of Financial Literacy?

As an educator, you know how important it is to teach financial literacy to your students. Helping young people become financially literate is one of the most important things you can do to help them succeed in life. 

But what are the key components of financial literacy? What topics should you focus on in order to make the most impact? Let’s take a closer look. 

1. Saving

Learning to save money is one of the most important financial skills that anyone can learn. It’s the foundation of all other financial goals, such as buying a car, a house, or investing in a business. 

Encourage your students to start saving as early as possible. Teach them different strategies, such as setting savings goals, creating a budget, and automating savings. Make it fun by showing them how compound interest works and how their savings can grow over time.

2. Budgeting

Budgeting is the process of creating a plan to spend your money wisely. It’s about allocating your resources based on your income and expenses. By teaching your students how to budget, you’re helping them to avoid debt and live within their means. 

Start by showing them how to create a simple budget, including fixed, variable and discretionary expenses. Emphasize the importance of tracking expenses and adjusting the budget as necessary.

3. Investing 

Investing is about putting your money to work for you. It’s about using your resources to generate a return over time. While investing can be intimidating, it doesn’t have to be. 

Teach your students about the different types of investments, such as stocks, bonds, and mutual funds. Show them how to research investments and evaluate risk. Encourage them to start investing as early as possible.

4. Managing Debt 

Debt can be a valuable tool for achieving your goals, but it can also be a burden. By teaching your students how to manage debt responsibly, you’re equipping them with the skills they need to avoid financial trouble down the road. 

Teach them about the different types of debt, such as credit cards, loans and mortgages. Emphasize the importance of paying off debt as soon as possible and avoiding high-interest debt whenever possible.

5. Managing Credit

Credit is an essential financial tool that can help us achieve our goals, such as buying a home or a car. However, it can also be a double-edged sword. By teaching your students how to manage their credit wisely, you’re helping them to avoid financial trouble down the road. 

Teach them how to use credit responsibly, including paying bills on time, keeping credit utilization low, and monitoring their credit score regularly.

When Should You Start Teaching Financial Literacy Skills?

According to a study by researchers at Montana State University, students who went to high schools where personal finance education was required were less likely to default on their debts and had higher credit scores than their peers. 

However, schools need to start teaching early. Primary students should be introduced to basic financial concepts such as saving and budgeting, whereas middle school students can learn about more complex concepts like credit, taxes, and loans.

When it comes to high school students, financial literacy education is critical, as they will soon be graduating and starting their adult lives. In high school, students should learn about student loans, understanding credit scores, and saving for a home. They should also learn about investing, how to create a budget, and how to file their taxes. Real-world examples like these will better prepare them for their financial futures.

It’s not only within the school system that financial literacy skills can be taught; parents and caregivers can also play a significant role in financial education. 

Even introducing children to basic concepts such as savings accounts, charity donations, and budgeting can have a lasting impact. Children who grew up with early financial education have been shown to have fewer financial problems later in life, so starting early can have a profound effect on their financial future.

How Do You Teach Financial Literacy to Your Students?

Let’s be honest – teaching finance to young minds can be a bit daunting and unexciting. But it doesn’t have to be that way! How can we make financial literacy fun and engaging? 

Read on to find out.

1. Make it a Game 

Students today are all about gamification, so why not use that to your advantage? Incorporating financial games into your lesson plans can be an easy and entertaining way to teach key money concepts. 

One fun option is ‘Payday’, which is a board game that teaches players how to manage their finances from a paycheck-to-cheap perspective. 

Another great choice is the classic board game, ‘Monopoly,’ which teaches foundational concepts like collecting rent, making investments, property management, and debt. Moreover, stock market games can help students learn more about investing and provide a great understanding of the market.

2. Be Honest 

When teaching financial literacy, it is essential to be candid and conversational. Be open and honest with your students, using a friendly and helpful tone to discuss different financial topics in a more casual setting. 

It’s especially important to explain to them that it’s okay to make mistakes in managing their finances, but it’s essential to learn from the experience. 

One method of achieving this is through sharing your own personal experiences that might instill a better understanding of their finances. Students are often fascinated by teachers’ personal finance experiences, so don’t be afraid to share them.

3. Show Them Helpful Apps

Technology has made it easier to manage finances than ever before. By downloading apps like Greenlight and GoHenry, students can learn the importance of budgeting, saving, and earning. 

These apps allow students to set financial goals, track their expenses, and monitor their allowance. It is an excellent way to teach them the skills they need to manage their money independently.

4. Create Budgets Together

By creating budgets together, you can teach students how to prioritize expenses, save, and limit unnecessary spending. You can begin by creating a simple budget and gradually increase its complexity as the students grow older. 

Make sure that you involve them in every step of the process, so they understand why it’s important to manage money effectively.

5. Play Financial Football

If you want to blend learning with fun, then financial football is the way to go. Students learn about managing money and financial decision-making through an interactive game. Comprising authentic NFL music, stunning graphics, and fantastic features, the game is available online for free. You can find it here. 

6. Have Career Conversations 

Students need to understand the connection between their careers and financial decisions. 

Some jobs may pay more than others and offer better financial perks like retirement benefits, health insurance, and pensions. 

By engaging in career conversations with students, teachers can help them make wise decisions. To take things up a notch, teachers can invite successful people in different professions to share their stories and career paths.

7. Bring in Guest Speakers

Inviting guest speakers to your classroom can offer valuable insights and tips on personal finance. Guest speakers can share their personal stories, struggles, and successes, providing your students with real-world examples of financial literacy in action.

8. Create a Classroom Store

Create a classroom store where students can purchase school supplies or snacks using classroom currency you’ve designated. This activity can teach your students about saving, budgeting, and spending money responsibly.

9. Give Students Real-Life Scenarios to Solve

Providing real-life scenarios to students is an excellent way to teach financial literacy. You can help your students understand how to calculate taxes, create a budget, or develop a purchase plan. 

For instance, ask your students to calculate their expenses based on their salaries, including expenses like groceries, utilities, car payments or transportation, and rent.

10. Teach Students About Scholarships and Financial Aid

Encourage high school students to apply for financial aid and scholarships. Often financial aid is based on a student’s need, making the burden easier for students and their families, but too many students don’t understand exactly how it works.

Explain that scholarships can be merit or need-based, and provide great opportunities to offset college expenses. Discuss the larger picture of college costs and demonstrate the impact of scholarships and grants on their bottom line. 

Don’t be afraid to talk about college loans – that way, if students need to seek them out, they will be more informed.

11. Make a Finance Word Wall 

Create a finance word wall that features financial terminology and definitions so students are constantly exposed to essential financial concepts and terms. Use it as a reference when discussing financial literacy or assignment tasks. 

When students are able to recognize financial terms, it becomes easier to discuss financial topics, enhancing their understanding and confidence in the subject. 

12. Don’t Forget Fringe Topics Like Insurance, Interest, Identity Fraud, etc.

Despite being considered a peripheral financial topic for many secondary and post-secondary curriculum manufacturers, insurance policies, interest rates, and personal financial security are vital concepts for students as they become more independent. 

Focus on these important topics to prevent financial disasters in the future of your students. As they approach adulthood, students should learn about the correct coverage needed for an automobile, health, and personal property.

Teach financial security skills such as credit card management, fraud prevention, and managing expenses in a way that is safe and still promotes growth.

Final Thoughts

These strategies are just the beginning of what you can do to encourage financial literacy in your students. By starting early, making it fun, and connecting it to real life, you can help set your students on the path to financial success. 

Using these strategies, you can help your students develop the knowledge and skills they need to manage money effectively, make informed financial decisions, and achieve their financial goals.