As a parent you are constantly helping your children develop an understanding of the world around them. As your children grow older, the conversations evolve from teaching your children basic skills, like manners, to more complicated topics, like financial management.
April is Financial Literacy Month, so it’s a great opportunity to try and make a point to talk to your kids about money and how to manage it. Maybe you bring it up while you’ve got them in your backseat on the way to school or while handing out allowances; as long as you get the conversation going, that’s what matters.
Financial literacy is the ability to understand the language of finance. Taking the time to introduce even simple concepts about what financially-related words mean can help your children greatly in the future. Financial literacy or financial education will allow your kids to make informed decisions regarding the management of their money and gain greater understanding of how money works in the world around them.
You may be surprised to learn that teens are anxious to have more of these money-related conversations, as well. According to a Teens & Personal Finance Survey conducted by Junior Achievement USA (in partnership with The Allstate Foundation) more than half of all boys and girls surveyed stated that, “when it comes to financial literacy, parents/guardians do not spend enough time talking to them about money-related topics.”
Helping your kids understand money at an early age doesn’t have to be a daunting task. Below are some simple tips to help get you started!
Young Children - START THE CONVERSATION
With your younger children, bring up money conversations in everyday life to help them understand the value of the dollar. Some examples of how to do this may be to discuss wants versus needs when watching various commercials on TV or talking about how much things cost when you are at the store. Here at Oink, we love the lessons and milestones offered on moneyasyougrow.org!
Pre-Teens – MAKE IT RELEVANT IN THEIR WORLD
One of the ways to enforce the knowledge on the value of a dollar is helping them plan for things they want. Some ideas of how to do this include making a wish list. This gives your kids an opportunity to earn money and save for big items. Another option is to give your kids a budget for birthday presents so that your pre-teen experiences finding the best deals on different gift ideas for their friends.
Teens – TEACH THROUGH HANDS-ON EXPERIENCE
As kids get older, open a bank account that will let them pay for things and learn how money comes in and goes out in a tangible way. As an extra incentive, you can even work with them to plan a vacation together and teach various budgeting lessons throughout the planning experience.
Young Adults – HELP THEM UNDERSTAND FINANCIAL TERMS
Preparing for college or the workforce is an excellent time to introduce terms that your young adult will need to understand in the near future. If your child is taking out a student loan, be sure to discuss interest rates with them and go over repayment terms. If your child is opening their first credit card, be sure to discuss borrowing mechanisms, such as APR and credit limits. Make sure your soon-to-be adult understands credit scores and the difference they can make on an APR in the future.
You don’t have to be a money expert to have these conversations with your child. Just introducing simple money concepts will go a long way towards fostering financial wellness. It’s also important to remember that you, as a parent, don’t have to be in an excellent financial situation to still be helpful in your child’s financial literacy. Don’t be afraid to talk about your own money struggles – it can be a good way to learn and grow together. What’s important is instilling a good knowledge of how money works so that children are eventually able to make smart and informed decisions on their own.
Happy Financial Literacy Month!
About Rebecca Howell
Rebecca Howell is the Marketing Manager for Oink.com, the first e-commerce solution that enables teens to manage, spend, and give their money within a parent-controlled environment. The technology offers parental controls and a budgeting dashboard for the entire family.