Earning, Spending, Saving and Investing: Financial Literacy for Kids and Teens

Earning, Spending, Saving and Investing: A Simple Explanation for Beginners

Introduction to Earning, Spending, Saving and Investing for Kids and Teens

This video explains the very basic concept of Earning, Spending, Saving and Investing in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about these, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

The topics covered are:

Old Version

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Infographic: Click Here to Download

What is earning?

Earning refers to your income or inflow of cash: it includes all the money you receive from different sources.

It can be active or earned income, which includes salary from a job, your tips, or earnings from your business.

It could also be passive or unearned income, which includes income from pension or social security, rent, royalties, or income from your investments, like dividend from stocks, interest from bonds, etc.

What is spending?

Spending refers to your expenses or outflow of cash. It includes all the money paid for goods and services that you buy or use.

There are 2 types of spending: Essential spending takes care of your needs, like mortgage or rent, utilities, groceries, etc. Discretionary spending covers your wants, like eating out, going to the movies, and vacations.

Spending can also be categorized into fixed expenses and variable expenses.

Fixed expenses stay the same every month, like rent, insurance, and loan payments. Variable expenses can change from time to time, like utilities, eating out, home repairs and entertainment.

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What is saving?

Saving is the activity of setting aside some money for future use, instead of spending it all now.

For example, you can save up money over time in a bank account to fund a specific purchase – say a new gaming console or a vacation.

You can also save to create an emergency fund – money you can dip into for sudden and unexpected expenses.

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What is investing?

Investing is putting your money in a place where it can grow. There are many avenues to invest your money, like stocks, bonds, and real estate, all of which can potentially help your money grow over time.

Investing results from saving, as you can only invest the money that’s saved.

The goal is to increase the value of your savings, and not simply store the money somewhere. Investing for goals like down payment for a home, your retirement or a child’s college expenses is very common.

Why are these concepts important?

Earning, spending, saving and investing are the most fundamental concepts in personal finance.

Getting a good understanding of these skills and how they impact each other is key to smart money management and leading a financially healthy life.

Earning, Spending, Saving and Investing: Old Version

Earning, Spending, Saving and Investing: A Simple Explanation for Kids and Beginners

Hi, Sooper Cooper. Even though you didn’t go to finance school, you should still know some basic concepts that are in finance that I will ask you about now.

Okay, bring it on!

Number one.

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Do you know what earnings are?

Well, earnings are the money that I get from chores, right?

Yes, they are the money that you get for chores, but there are also other ways to get earnings. Do you know any of that?

Maybe you can get earnings from a job?

Yes, very good Sooper Cooper. Next question.

Do you know what savings are?

Well, savings are what you put in a savings account?

Can you explain more about that?

No, I don’t know.

Well, savings are what you get when you don’t spend everything that you earn.

For example, if you earn $10 from doing chores, and you spend $6 on candy, you would have $4 left over. These $4 would be your savings.

Oh, okay. Is there anything else you wanna ask me?


By any chance, would you know what investing is?

Ummmm, no I don’t know anything about investing. Can you tell me about it?

Well, investing is one of the things that you can do with your savings. Investing is a way to place your money so that it can grow, or make more money, for you.

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For example, if you put it in a stock, bond or CD, then it can make more money and grow for you. All those three are a type of investment.


Now that I have explained to you all these topics…

I’d like for you to tell me the differences

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Okay. So, earnings are what you get from doing chores or a job. Then, savings are what you get when you don’t spend everything you earn.

And then, if you have savings, then you can do some things with it – and one of those things is investing, right?

Yes, very good Sooper Cooper. And one more thing.

Not another question!!!

No, no, no, not another question.

Remember, finance is your friend!

Video Featured in the Below Financial Literacy Course for Kids and Teens

Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids and Teens

Podcast: Earning, Spending, Saving and Investing – Financial Literacy for Kids

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