Kids May Know More About Money Than You Think. How Video Games Instill Financial Literacy

From Animal Crossing to Minecraft, kids are learning crucial money skills.

Marcos Cabello
Based in Boston, Marcos Cabello has been a personal finance reporter for NextAdvisor and CNET. Marcos has covered cryptocurrency, investing, banking, and the US economy, among other personal finance subjects. If you don't find Marcos behind his computer screen, you'll probably find him behind another screen, playing the newest Nintendo Switch title, streaming the latest TV show or reading a book on his Kindle.
Marcos Cabello
8 min read
Hand holding credit card next to video game controller
Brandon Douglas/CNET

As a financial planner, Tom Martin knows how important it is to teach children about money -- even from an early age. And he also knows that video games can help. 

Picture of Tom Martin

Tom Martin

Courtesy of Tom Martin. Illustration by Brandon Douglas/CNET.

Martin has two children, ages 13 and 15, who play a ton of video games -- just like 71% of children under 18 in the US. Many of those games contain the building blocks of basic financial concepts, and Martin said he has been able to use them to bridge the gap between in-game economies and real-life money lessons.

"If I can introduce some real-life elements to their game and make those kinds of connections, then I feel that I should share them," Martin said. "They understand how the economics works within the game, but they don't understand how it might relate to or how it might differ from reality."

While some parents like Martin see the educational benefits and opportunities of some video games, a recent study indicated that most parents -- a whopping 86% of those surveyed -- think teens spend too much time playing video games.

Experts say those parents are missing an opportunity to teach their kids in a new way and on a playing field their kids are already excited about. In fact, they say video games offer a unique way to lay an educational foundation for real-life financial literacy. 

Connecting in-game economies to real life

Many video games have in-game economies that are part of the gameplay. Others have gameplay that is entirely built around it. Animal Crossing: New Horizons is probably the foremost example of the latter -- and it's a game Martin's kids love to play.

The premise of Animal Crossing: New Horizons is simple. You move away from home to a deserted island. You have to buy a house, you have to get a mortgage and you need to make money to pay off the mortgage. 

Picture of Douglas Gentile

Douglas Gentile

Courtesy of Douglas Gentile. Illustration by Brandon Douglas/CNET.

"That sounds dreadful, doesn't it?" said Douglas Gentile, a psychology professor at Iowa State University.

"And yet, the way the game plays is you build a sense of community, you gain an empathy for the other characters who asked for your help and you get to help them. It has this real pro-social set of effects. And we've done studies in several different countries that when kids play pro-social games, they gain empathy and that leads to more helpful and cooperative behavior."

When it comes to the finance portion, unlike real life, Animal Crossing gives you unlimited time to pay your mortgage and you aren't charged interest while you pay back the loan. The game also has a "stalk market," where players can buy turnips (a substitute for stocks) on Sunday and check fluctuatingprices throughout the week to see if they can make a profit. 

"There's an income component and personal finance to learn here," Martin said. "We need to learn how to save and determine where to direct our currency in the game." The stalk market portion of the game piqued Martin's interest the most. When Martin asked his kid what all those turnips around his island were, his kid replied, "We're making money on this island now." 

Through these components -- paying off a mortgage, building infrastructure, investing in the stalk market and finding the best deals through price arbitrage -- Martin has been able to introduce real-life money lessons to his kids and teach them how some of the game's components differ from or mirror the real world. For example, mortgages actually come with an interest rate unlike in the game, while savings accounts in the real world earn you interest like in the game.

While Animal Crossing is the flagship game of this style, many other games have similar economic tie-ins. But it's not just the content of the game that helps children learn, it's also the processes they go through within the gameplay, said Pamela Rutledge, director of the Media Psychology Research Center and psychology professor at Fielding Graduate University in Santa Barbara, California.

Picture of Pamela Rutledge

Pamela Rutledge

Courtesy of Pamela Rutledge. Illustration by Brandon Douglas/CNET.

"I have a daughter who's just like a master negotiator in Roblox," Rutledge said. "She trades unicorns and rare things in Roblox, and I don't even understand half of what she's doing, but she spends a lot of time developing a strategy to negotiate, which is a pretty important life skill when it comes right down to it."

A lot of learning happens in this "soft" sort of way, whether it's about the process or content of a game. Games that include some sort of in-game economy and introduce the building blocks of real-world finance are a great starting point. Aside from Animal Crossing and Roblox, other games in this vein include Civilization and Minecraft.

"Any time they can get experience with concepts of value, trading, saving and all of those things," Rutledge said, "even if it's a sort of byproduct of whatever activity they're doing, it's an important lesson."

Nabeel Ahmad, a parent of two, similarly uses games to teach his children the basics of personal finance, but he doesn't use the content of a game as the entry point to teach. Rather, Ahmad uses the process of purchasing video games and add-ons within Fortnite, a game his children play a lot, to teach his kids about money. Ahmad, co-founder of Changeforce.ai, has a doctorate in learning technologies and teaches at Columbia University in New York. 

Step one for Ahmad was teaching his children how money is transferred from their bank account  -- his children have savings accounts -- to V-Bucks, which is the in-game currency for Fortnite. 

Picture of Nabeel Ahmad and his family.

Nabeel Ahmad and his family

Courtesy of Nabeel Ahmad. Illustration by Brandon Douglas/CNET.

"To me, that was important for them to visualize, so they can see the actual relationship between where your actual money was and how we use a medium like a credit card to then purchase something in a virtual game, instead of thinking that it's like magic money," Ahmad said.

He then taught them about prioritizing their in-game currency for what they need versus what they want, and how they should save up if there's something they want but don't have enough money for. 

Video games can be great teachers

The psychological effect of video games on children has multiple dimensions, according to Gentile. The content of a game and the process of playing it provide multiple pathways for learning.

Practicing pro-social skills, mastering in-game currencies and solving puzzles through critical thinking are all skills that children can learn by playing video games -- and they often don't even realize they're learning.

"Game-based learning is a really big topic in education right now," said Kelsey Brothers, a teacher at the JCC Greater Boston Early Learning Center. "It mostly boils down to motivation and attention for children. It really helps them find intrinsic motivation. Bringing a game in will help keep their attention up, having fun while they're learning, so it feels less like they're learning while doing it."

Picture of Kelsey Brothers

Kelsey Brothers

Courtesy of Kelsey Brothers. Illustration by Brandon Douglas/CNET. 

Among other reasons, video games can be especially great teachers because they provide instant feedback, according to Rutledge. 

"If you think of all the things that people do when they're playing, they're interactive," Rutledge said. "They're making choices and getting feedback. Learning theory says that the ability to try things and get feedback allows you to learn much better than not getting instant feedback."

Essentially, that feedback loop works as an experiential learning opportunity for children, where they can fail without repercussions in the real world and continue practicing the skills they need to be successful in a certain game. It can also help teach them to be patient, resilient and persistent, as a tough game might require multiple playthroughs for a level before you're actually able to beat it. 

Spent all your in-game money on a useless item instead of something you actually needed to progress? That's a lesson in prioritizing your needs over your wants. Is it taking you an hour to solve a puzzle? That's sharpening your critical thinking skills. Playing a game that's actually a visual novel? That's helping you practice your reading skills. 

"Kids are natural learners and games are natural teachers," Gentile said. "Ultimately, your grandmother was a great neuroscientist. She told you practice makes perfect. She was right."

Meet your kids where they are

Meeting children at their level was the top tip from every parent, educator and expert I spoke to. This means that you need to get interested in what they're doing, understand what they're playing and look for ways to connect with them through their interests.

Picture of Will Myers.

Will Myers

Courtesy of Will Myers. Illustration by Brandon Douglas/CNET.

Will Myers, a personal finance influencer on Instagram and TikTok, uses a variety of games his children are interested in to teach them about money, including using the Pokemon Trading Card Game to teach interest.

"In one moment my kids are playing and having fun, and I'm like, 'Can I borrow your Pokemon card?' and they're like, 'No way,'" Myers said. 

"I tell them that if they just let me borrow a Pokemon card for one day, I will give them a brand-new pack of Pokemon cards the next day," Myers said. "And they're like, 'Wait a minute, what?' And so that's teaching the basis of interest."

Myers similarly uses his children's interest in video games to teach them about business. He'll sit down at the computer with his kid and they look up information about a company, say Nintendo or Fortnite maker Epic Games. Among other things, they'll research the history of the company, how it started and whether it's a publicly traded company today. 

These are all different avenues to infuse real-life money lessons into whatever your children are interested in. That has helped Myers get his children to associate money with fun, instead of harboring negative emotions about money.

Don't complicate it

Keeping learning simple is important. "Kids have been sitting at school all day … If you try to sit down with your child and teach them a lesson or talk to them about money, by the time you reach them, their brain is checked out, naturally," said Allison Baggerly, who was a teacher before starting her own personal finance podcast, The Inspired Budget

Picture of Allison Baggerly

Allison Baggerly

Courtesy of Allison Baggerly. Illustration by Brandon Douglas/CNET.

That's why she recommends using games, where children are learning but don't feel like they're learning. 

Whether you're using the board game Monopoly, the stalk market in Animal Crossing or the in-game currency in Fortnite to introduce lessons about money, be sure to focus on just one thing at a time and build upon each concept as you continue to talk about finance with your child.

"Teaching kids through games -- you're going to have a higher engagement than if you were sitting at a dinner table or in a classroom just lecturing," Baggerly said. " Games allow you to have a more natural conversation when things come up … But the kids might not realize that that's where the teaching is."

For more ways to teach your kids about money, check out the old-school financial rules this parent is no longer teaching her kids (and what she's teaching them instead). You can also explore ways to gift kids money during the holidays and the best debit cards for kids and teens