Abstract: Researchers and policymakers advocate teaching children about digital privacy, but privacy literacy has not been theorized for children. Drawing on interviews with 30 families, including 40 children, we analyze children’s perspectives on password management in three contexts—family life, friendship, and education—and develop a new approach to privacy literacy grounded in Nissenbaum’s contextual integrity framework. Contextual integrity equates privacy with appropriate flows of information, and we show how children’s perceptions of the appropriateness of disclosing a password varied across contexts. We explain why privacy literacy should focus on norms rather than rules and discuss how adults can use learning moments to strengthen children’s privacy literacy. We argue that equipping children to make privacy-related decisions serves them better than instructing them to follow privacy-related rules.