Back to School: Financial Literacy for Children
Are you looking for ways to help your children get a head start on learning about personal finance? It's never too early to start teaching financial literacy. Even if you are uncomfortable to talk about it.
As parents, we play an essential role in instilling the fundamentals of money management that will stay with our kids throughout their lives. Our kids are always observing how we handle money even if families don't talk about it.
We have a list of classes that kids need to pass in order to graduate from high school, but financial literacy is slightly talked about (economics, math). Yet we expect every 18-year-old to understand the terms of their student loans, credit cards, and the banking system. This can make children seek out money tips on social media and friends.
Here's a short comprehensive back-to-school prep should include shaping their financial abilities and preparing them for adulthood responsibilities.
Want Versus Need
How many times have you seen a child have a meltdown in the middle of the grocery store because Mom or Dad refused to buy them a toy, a candy bar, or a cookie - Do you get the idea? By the time kids are seven or eight, they can certainly understand that things like food, shelter, and clothing are needs, while the latest toy is a want. It’s also important to teach kids that wanting an item is not wrong, but that needs always come before wants.
Schools talk about wants versus needs in social studies starting as young as kindergarten.
Check out this K-2 video on Wants vs. Needs
Shopping is Learning
One great way to illustrate this is to let your child go grocery shopping. Give them a list and some money, and have them pick out and pay for everything on the list. Do not help them out if they go over – they will simply have to choose something to put back if they don’t have enough money to pay for everything.
While it may be many years before your middle schooler will need to pay their own monthly bills, have them sit with you while you pay the bills. Explain how much money you have in income and let them look at each of the bills that need to be paid. Hopefully, this exercise will help them understand that things like satellite TV, cell phones, and even a place to live all cost money, and that you need to have sufficient income in order to pay those bills.
The True Value of Money
While we all want to protect our kids, sometimes letting them make unwise purchases will explain to them much better than we can how quickly we can spend money, and how easy it is to wind up with a useless, broken, unnecessary item. Step back and let them make their purchase anyway.
How Credit Cards Really Work
To young adults, a credit card can seem like a miracle, allowing you to buy something that doesn’t require cash. While credit cards and other credit purchases such as cars, homes, and even education can benefit from having credit, make sure your kids understand that the inability to pay down a credit card or a student loan on a timely basis can destroy their creditworthiness for years.
While high school helps to prepare kids for college or trade school, financial literacy helps prepare kids for the real world. It’s a valuable lesson that should not be skipped.
Beth Kopliner book " Make your Kid a Money Genius, ( Even if You're Not)
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