Financial Literacy Tests for Kids
According to the Nations Report Card on Financial Literacy, only 57% of American adults are financially literate. This means, 43% of American adults don’t have the skills and knowledge they need to make informed financial decisions and properly manage their finances. One of the reasons this statistic might be so high is an overall lack of financial literacy education. Data from the Nations Report Card confirms this as four out of five adults stated they were never given the opportunity to learn about financial literacy.
When it comes to our kids, it was reported that high school seniors across the nation scored an average of 59.6% on a financial literacy exam. These aren’t the results we want for our kids. So, the question is, how do we create a better financial future for our children?
Well, we provide them with opportunities that we might not have had. We teach them about financial literacy, encourage them to ask questions, and prepare them for life in the real world. While 41% of parents believe it is important to talk to their kids about money, they are reluctant to have the conversations.
For those parents that do feel reluctant about having these conversations, I hope that this article can help by providing some useful tips on the types of conversations you can have with your kids. This article will also suggest some ideas for how you can test your kid’s financial knowledge as a way to gauge if they are grasping important financial concepts.
Core financial literacy concepts for kids
It is almost never too early to start talking to your kids about money. Encouraging your preschool-aged children to count and play with pretend coins and bills is a great way to start introducing foundational money concepts. Gifting children’s piggy banks at a birthday or starting to have conversations about chores and allowance is another method you can use early on.
By the time your kids are in elementary, they should start to learn about the concepts of saving, giving, spending, comparison shopping, and investing. There are several online resources like this one from InCharge Debt Solutions that provide free lessons plans for teachers and students. In the best-case scenario, your children attend a school that provides a structured financial literacy program. However, if your kids don’t have access to financial education at school, you can use these lesson plans to do some at-home learning with your children.
Whether you have toddlers or teens at home, the message is the same. Ensure you are having regular and deliberate conversations about money and give your kids real-life scenarios in which they can practice their money skills. This can be as simple as bringing them to the grocery store and letting them help you count out the money to pay for the bill. Or inviting them to watch you invest using an online brokerage.
How to test your kids financial knowledge
In addition to more formal financial literacy tests or quizzes, there are other ways to gauge whether or not your children are learning important financial concepts. For instance, you will know your child is starting to understand the concepts of saving and spending if they are able to save up their allowance for a toy or item they really want and then go to the store and purchase it for themself. Their ability to save up for something they want also demonstrates that they have acquired the skill of delayed gratification.
Another simple way to see if your financial lessons are paying off is if your child or teenager can carry on a financial conversation with you. Do they understand what you are talking about and can they hold their own?
You can also encourage your children to participate in important financial tasks like setting a financial goal (e.g. I want to use my part-time job to save for a car or college) and creating a budget. If they are able to successfully accomplish these tasks, then you can feel confident they are making some progress.
The top financial literacy quizzes for kids and parents
There are plenty of online resources that you can use to test your kid’s financial knowledge. The purpose of testing is not to assign a grade but instead to gauge if your children are starting to understand important financial concepts. Remember, the whole goal of doing this is to ensure you child is equip with the information, knowledge, and skills they need so they can financially thrive in the real world.
For kids, there is the Biz Kid$ Financial Literacy Pre Questionnaire. Biz Kid$ is a television show that teaches kids of all ages about financial education and entrepreneurship. The Consumer Financial Protection Bureau (CFPB) also has a financial literacy test for teens. It helps to measure how financially prepared teens are for the real world. Questions range from how to read and interpret an invoice to how to read a payslip.
Teenagers and parents can also check out a financial literacy test by Rutgers called “The Financial Fitness Quiz.” You simply answer a series of financial questions using a rating of one to five (1 = never, 5=always). For instance, “I have enough money to pay for an emergency, such as a large car repair.” Based on your answers, you will get a score that represents your level of financial fitness. There is also a financial literacy quiz presented by Finra Investor Education Foundation which presents five financial questions and one bonus question. After you provide your answers, you can see how you stack up against the national average.
How will you test your kids financial literacy?
Unfortunately, financial literacy is not taught in schools in the same way that math and biology are. While some schools provide excellent financial programs to students, other schools have no financial curriculum. So, as parents, the task often falls on us. And, even if we attempt to teach our children everything there is to know about personal finance, how do we know if it’s working? Finding ways to test your kids’ financial literacy helps you to gauge whether or not progress is being made. It can also help you to identify if there are any gaps in their financial education. While there are many tests and quizzes available for free online there are also more informal ways to test your children’s knowledge through real-world experiences and simple family conversations.