Financial Literacy Program

A Parent's Guide to Financial Literacy

Financially Literate Children

For some children it just comes naturally. By the age of three my older son managed his $0.25 per week allowance with ruthless efficiency. By the age of 28 he had purchased a four-bedroom house in California and paid his mortgage off in full.

I should have known. In high school he developed into a competetive swimmer. On his first out-of-town meet I gave him a five dollar bill. The team bus was planning to stop off at McDonalds to celebrate their inevitable win. I don't recall if they won yes or no, but I do remember that he brought that five dollar bill back home again. He also brought home a bag of leftovers - a big mac, two cheeseburgers, and several containers of fries. This raises the suspicions of any alert parent. How did this happen?

"Those bozos," he replied. His tone was clearly contemptuous. "They just got out of a swim meet. They're starving. They walk into McDonalds with more money than brains and buy three big meals. They eat two. They don't even touch the third. It's still in the bag. I just wait for them to throw it out."

I tried to say something charitable. No such luck. "And they look down on me," he continued, "because I was glad to get their leftovers." He placed the five dollar bill carefully in his savings. As far as I know that same five dollar bill went into the down payment on his house.

Studies show that the level of financial literacy in a child depends on the level of financial literacy in the mother1. OK, his mother is a professor of finance. But for my other son it doesn't come quite so natuarally.

So if it doesn't come naturally then what is a parent to do?

In this Parents' Guide we offer a collection of suggestions and techniques. Try them, share them, let us know what works for you.




Elisabeth Oltheten, PhD.
Teaching Professor of Finance
Financial Literacy Program
University of Illinois at Urbana Champaign
at oltheten @

1 Lusardi, AnnaMaria and Olivia S. Mitchell, "The Economic Importance of Financial Literacy: Theory and Evidence" The Journal of Economic Literature 2014, 52(1), 5-44