Financial Literacy & Behaviors

Compositive Model

Financial Literacy & Behaviors

Financial literacy includes skills and knowledge required to “discern financial choices, discuss money and financial issues without (or despite) discomfort, plan for the future, and respond competently to life events that affect everyday financial decisions,” according to financial literacy researcher Lois Vitt.

A variety of experiences can help shape children’s financial literacy and management behaviors. Participation in youth development organizations, parental financial guidance, work experiences in adolescence, and educational experiences in school help develop children’s financial behaviors (e.g., record keeping, staying on budget, and saving money for future schooling) and financial literacy.  

Key research findings:

  • Financially-oriented parenting behaviors are associated with children’s financial behaviors and literacy.
  • The same study found that children were more likely to donate money when they received allowances and talked with parents about donating.

Promising practices:

  • 4-H is a positive youth development organization that provides hands-on learning opportunities for youth in three areas (science, citizenship, and healthy living) that serve to promote the development of life skills.

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