The percentage of American adults with strong financial literacy—the ability to understand various financial-related concepts and put them to use—has fallen to historically low levels in recent years.
One example: Just 34 percent of adults showed high levels of financial literacy in 2018—down from 42 percent nine years earlier—based on a financial literacy test offered by the FINRA Investor Education Foundation.
Findings such as this are prompting more families to push for greater financial literacy among kids and other young Americans to help reverse recent trends. And indeed, if you have children or grandchildren, there’s likely a lot you can do to instill some financial smarts in your heirs.
CONCEPTS TO COVER
The “right” financial literacy knowledge will differ depending on people’s age and maybe maturity level. That said, you probably want to address specific financial concepts—not just values-focused lessons such as the importance of saving money. Your list of important financial topics could look something like this:
- Unit pricing. Trips to the grocery store are a perfect and natural way to help a young child grasp the concept of price per pound, price per ounce and the like, so he or she can see how items that might seem less expensive can actually be more costly over time.
- Budgeting. Setting up a basic budget can be one of the best ways for teens to wrap their arms around concepts like cash inflows and outflows, necessities versus wants, and emergency funds. This is where letting kids get some practical experience—an allowance, a small side business—can make a big impact.
- Savings yields. Compare yields offered by local banks, online banks, CDs and other common vehicles for short-term savings or emergency funds. Do the math to see how much money you’d have at the end of one year with those various yields. Expand on the topic by discussing the differences in liquidity and access to your funds in these different account types.
- Credit and borrowing. The allure of credit card spending often starts young—so it’s good to show kids early in their teens how interest charges on balances and cash advances are calculated, and what those charges mean in terms of the real cost of credit card purchases. Discussions about credit and loans might also include the topic of credit scores—their importance and how our behaviors impact them.
- Equity ownership. Eventually you’ll probably want to impart some facts about how capital markets work and how to tap into their growth potential through equities. The field is wide open here, from basics such as price per share and the pros and cons of direct ownership versus funds to the nuances of capital gains taxes and beyond.
Fidato Wealth LLC is a Registered Investment Adviser. Please note that the use of the term “SEC Registered Investment Adviser” and description of Fidato Wealth LLC and/or our associates as “registered” does not imply a certain level of skill or training. This brochure is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Fidato Wealth LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Fidato Wealth LLC unless a client service agreement is in place. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message. Please note that trading instructions through email, fax or voicemail will not be taken, as your identity and timely retrieval of instructions cannot be guaranteed. If you do not wish to receive marketing emails from this sender, please send an email to sayhello@fidatowealth.com. This article was published by the VFO Inner Circle, a global financial concierge group working with affluent individuals and families and is distributed with its permission. Copyright 2025 by AES Nation, LLC. Fidato Wealth is not affiliated with AES Nation, LLC. AES Nation, LLC is the creator and publisher of the VFO Inner Circle Flash Report.
DOWNLOAD A PDF VERSION OF THIS ARTICLE HERE
