I recently received an email, suggesting I talk about teaching children financial literacy. That is something I view as very important, the younger they learn the better off they will be, when they grow up. However, it boils down to being the parents responsibility. If the parents doesn't teach them, their inaction will speak louder then anything the kids learn in school. Let's face it, kids learn by watching what their parents do. I am a great example of that. I knew from school and church the right way to handle money, but seeing my parents bad habits spoke louder then the head knowledge I was given.
Everyone knows that young people are pros at spending money; millions of dollars are spent annually on advertising aggressively directed towards them. They know how to use ATM machines to take money out. But, in these uncertain economic times, do they know how to save it? And do they know how to think long-term – beyond the weekend – about their finances? What about credit card debt? Or investing for the future?
The National Council on Economic Education (NCEE), a nationwide organization that serves to promote financial literacy with students and their teachers, has this to say on its website: “NCEE surveys show that nearly half of our young people don't understand how to save and invest for retirement, nor how to handle credit cards, don't know the difference between inflation and recession, nor how government spending affects them. If we fail to act now to improve economic literacy in this country, our children will be at risk for crippling personal debt, costly decisions at work and at home, and lack competitive skills in a fast-paced global economy.”
- Education.com
Even Robert Duvall, PhD, President and CEO of NCEE, agrees. In the above article he says, “We know that the skills of managing your money well, are not skills that you’re born with. It’s learned behavior.”
So what can parents do?
- First and foremost, set a good example. Because kids, as I said above, watch everything their parents do. It doesn't matter what a parent tells their kids, it's what the kids see their parents doing.
- Start saving – at any age. The earlier a person starts building their savings, the better off they will be financially in their future.
- Budget sense. The article suggests including the kids in on the budget discussions with you and your spouse. This way the kids get a better understanding of their families financial situation and how to handle money properly.
- Make it a long-term conversation.
Financial matters can get complex pretty quickly. But kids who learn basic principles of earning money and saving it, of what things cost and how to budget for their expenses, will be in a much better position as young adults to understand the more complex issues of mortgages, credit cards and interest rates. Parents who introduce their kids to solid financial principles early on are providing an important part of their children’s preparation for the "real world."
- Shop Together. This is the perfect time to talk finances. It allows the kids to see and understand the prices of things. Why does this item cost 50 cents more than the other one? What does that extra 50 cents buy you? Is it worth it?
April was Financial Youth Literacy Month, which means it's as good a time as any to start talking to kids about money. Lori Mackey, the "Money Mama" and author of "Money Mama & The Three Little Pigs," a read-aloud book that teaches the basics of sound money management, visited "Good Morning America" to explain how to teach kids about saving and spending.
In an article that ABC aired in 2007, Mackey discussed kids and money.
Mackey said it's never too early to start talking to kids about money.
"It's never too late, but if you can start early, you teach them to give, invest, spend and save wisely, they learn the habits of wealth," she said.
One of her first suggestions is to teach the kids the 10, 10, 10, 70 rule.
And their are money banks (aka piggy banks) that are designed to do this from various organizations. Off hand Crown Financial Ministries as such a bank that they sell. In addition, if memory serves me, Dave Ramsey does as well. Perhaps, one of his staff members (like Chris) that reads this blog can confirm this. I have also seen other organizations promotes such banks, but the names of those organizations escape me at this time.
Mackey also suggests playing such board games as Life or Monopoly as tools to teach kids about money. These games can helps kids learn about investing and stocks and even how money compounds and grows in a fun and entertaining way.
Photo courtesy of Shirleys-Preschool.com
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