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Money Management:
Every Day is a Teachable Moment for Kids
Children are not likely to develop basic financial literacy skills in school. According to the American Banker’s Association, the average high school student lacks the basic skills to balance a checkbook or debit card register, and most Americans still are not saving for retirement. Yet, we all agree we want better for our children.
Let’s find teachable moments with our kids, nephews, nieces and grandchildren. Talking about money can be uncomfortable but it’s worth it. By starting our kids along the path to good financial practices, we set them up for success and they’re likely to maintain these good habits in adulthood.
Where to start?
- If you’re a parent speak with your spouse or partner so you’re both on the same page when it's time to talk to the kids about financial priorities. If you’re not the parent, follow their lead.
- Put yourself in the child’s shoes. Try to remember what your top financial concerns and priorities were at that age. Buying that stuffed animal or video game just might be the perfect opening to talk about money.
- Ask about their thoughts on money. The context of this conversation will depend on their age, but it'll show you're interested in their opinion and make financial conversations more productive.
Now that you’ve laid the groundwork, jump in. There’s no expectation that you explain global economics or how the Prime Rate is established. Instead, relay money-management in the context of what you know. In fact, it’s more meaningful to kids—and easier for you—to share examples from your own life and don’t shy away from sharing your fiscal blunders too.
You know your kids best, so adjust your approach to suit them. Kids learn by doing so bring it up during everyday activities. While shopping, talk about price comparisons or how much you saved by buying an item on sale. If you’re planning a major purchase (i.e. a car, home or vacation), talk about how even grown-ups get to save up for the items they want.
In addition to talking about it, introduce hands-on opportunities such the tried-and-true piggy bank. Take it to the next level with an older child by changing that piggy bank into four jars for saving, spending, donating and investing. The amount of money in the container isn’t important; it’s the process.
Take your child with you to the bank when you open her first savings account. Once your child has mastered banking, you can begin teaching about investing. And when she wants something she can't quite afford, discuss the value of saving versus borrowing.
Remember there are lots of great online financial resources to assist you, including free advice on age-appropriate topics and several right here on our site. If your child knows more about the Internet than you, let him search for sites that are written just for kids.
However you approach the subject, remember to stay focused on the goal: to raise a financially savvy young adult, who can go into the world with a basic knowledge about saving and spending so he or she avoids the temptations of excessive spending.
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