Make financial literacy a family affair
Following the Great Recession, many households took strides to overcome heavy debt, correct harmful spending behaviors and adopt healthier savings patterns. Credit counseling agencies saw a spike in the percentage of Americans who were not only focused on paying down balances or entering into debt consolidation programs, but also households who wanted to improve their financial literacy.
Credit counselors, advisers and bank professionals have heralded Americans’ renewed focus on financial education. However, experts also agree that children and teenagers develop their money management styles from their parents and receive little financial instruction in school. As a result, professionals say it’s imperative that adults not only exhibit wise spending habits, but also teach their children smart financial skills. Parents often balk when it comes to having money discussions with their children, but kids can pick up on basic concepts from an early age that may help them make smart decisions throughout their lives, according to Fortune magazine. For example, parents can ingrain the importance and rewards associated with saving money by starting a piggy bank or children’s bank account with young kids. Games, such as “playing bank,” can also be an effective way to begin discussions relating to money.
A weekly allowance is another common and beneficial way to educate kids on saving and spending. Taking them shopping and discussing the benefits and drawbacks of their purchases, giving them the option to save or spend or even agreeing to match their savings or pay them interest can raise important questions for kids.
As children get older and understand the foundation of saving and spending, parents can take it a step further by introducing them to credit cards, debit cards and budgeting. Some adults allow their children to sit with them while they establish their monthly budget to show them how to manage their obligations, credit card debt and savings accounts.
There are several ways to introduce financial concepts to kids of any age, and several agencies, banks and organizations offer resources and tools to teach literacy to individuals of all ages. The important thing is to have conversations with children about money and give them enough knowledge to start making smart financial choices. A recent Jump$tart survey shows that children who grow up with a strong financial background make more sound money choices than kids who have no financial instruction.