Everyone knows that children and teenagers learn best from their parents (or caregiver). Few things are more relevant to success than money “smarts”. Therefore, your teaching of financial literacy is crucial. But where would you start?
Back in November 2015, when we wrote Tips for Teaching Young People About Money, there were few good aids for teaching financial literacy to young people. But, in the short time between then and now, the Consumer Financial Protection Bureau (CFPB) has created a truly wonderful set of tools to help teach sound financial principles at all stages of a child’s development. Based on a study of how children develop the abilities and attributes that contribute to financial well-being in adulthood, the Money as you Grow website provides conversation starters and activities organized by Early Childhood, Middle Childhood, and to later Teens/Young Adulthood. We urge you to use this site for your family’s financial education.
A look at some specifics
Let’s say you want to broach the topic of saving with a 10-year old. One of the recommended conversation starters is, “It is a good idea to save at least a dime for every dollar you receive.” Imagine how that conversation might develop.
- You could remind them of the reasons to save and show them how to do it, even consider a “matching plan.”
- You could start a community bingo card and have them keep track of all the things they see such as the library, bus, gas station, and talk about who pays for those things, and how.
Your local library may have already begun the Money As You Grow Book club that uses a reading list to teach key money concepts. (And, if the library hasn’t started the club, there’s a handy implementation guide on that page you can use to start your own.)
There is an equally wonderful worksheet for Teens and Young Adults that teaches them how to quantify how career choices have influenced the lives of their family members, and how to identify ways to follow-through on their goals. You could also broach the topic of earning by saying, “Your paychecks might be smaller than you expect because taxes are taken out first.”
To start a conversation about borrowing with a young adult, you might say, “You should use a credit card only if you can pay off the money owed in full each month.” Then explain that there may be an emergency expense that changes things, and why it’s important not to charge everyday items. Or you might use the Peoples Bank debt payoff calculator to see how long it could take to pay off $1,000 in credit card debt making minimum monthly payments. Think of how great that would be, if your child learned early how to use credit cards responsibly!
It takes a parent and caregiver to leave a lasting legacy
The greater inheritance is knowledge, including knowledge of how to put financial assets to work. Parents and caregivers are in the best position to be the force for good in building the foundation for their child’s later financial health. It is a family investment that will keep on giving.
In our opinion, wise parents and caregivers will educate their children about financial literacy by using the Money as You Grow collection of tools.