There are many ways to help teenagers as well as children learn about financial literacy. Everything from games to free smartphone or tablet apps, classes, books, classes, and just practical, everyday tasks or activities can be used to teach kids the value of money. The fact is that youth need to know at minimum the “basics” of financial literacy, and we have a list of resources as well as tips listed below that can help them as well as you, their parents, teachers, or role models.
Today’s teens and kids have more information than ever right at their fingertips, but financial literacy isn’t a large part of the public education system. But it is such a needed skill. Sadly, most states do not mandate financial literacy classes in the educational system, so it needs to be taught in the home or some other place. Teaching your child good financial habits can help make future education and career choices, save for retirement or avoid debt, assist them as they prepare for their first job and it will help them learn to make responsible personal or financial decisions.
Many people may think of finances as a subject best left to adults. However, early learning can keep children from making costly mistakes in the future. Adults are constantly preparing children for the future. While the importance of higher education continues to be a topic of discussion, the reality of making financial decisions is often left unspoken.
Giving children the benefits of and helping them learn about financial literacy requires more than just buying a piggy bank or setting up an allowance. While these are good ways to start, financial education should dig deeper into your child’s future. These tips and well as resources can help you teach your child about his or her financial future.
Resources to help kids develop financial literacy skills
Some adults may feel uncomfortable talking about the family budget or how much money they earn. Or they do not like talking about debt, retirement accounts, needs or wants, or investing. Or maybe the adult does not know about these financial literacy skills themselves. But people need to learn and share the info. As when children develop financial literacy they are better prepared for the future.
Technology can help teens and kids learn about financial literacy. There are free or low cost apps for Android and Apple smartphones, website browsers, financial literacy programs for tablets and computers and many other options. Kids can learn about budgeting, saving an income, buying stocking or mutual funds, or how to best use any money they make from chores or part time jobs among other things. Many of the financial literacy apps are free and involve parental guidance too. Find apps that teach kids financial literacy.
Teach or talk to your kids about money
Talk to your kids and have conversations about money. Some adults or parents think that household finances and other information about money should be a private matter. But in order to help your teens or children to learn about financial literacy, the conversations should be open to children as well.
We take for granted that our children are learning things from school and the world around them about financial literacy as well as other topics. While this may sometimes be, there are many topics that benefit from a real conversation. A good way to find out your child’s opinions about money is to ask what he or she knows about financial literacy.
You may be surprised to learn how little information (or worse, misinformation) is available to teens as well as kids in general about spending, money, debt, and other topics. Ask your child financial questions that might interest her or him like the cost of a monthly cell phone bill, or what he or she thinks they will earn at their first job.
While the answers may be incorrect, be sure not to ridicule your kids as you let them down gently about the truth. This can give you an opportunity to help your child learn about budgeting, financial assistance for education, spending for needs, and early employment.
Explain to them what it means to set a budget and how to track spending. Talk to them about investing and retirement accounts as well as credit card debts. Allow them to ask questions about money and give them answers in terms that they can understand. You should also explain the difference between wants and needs. Involve kids in your household finances, including income as well as spending.
Providing your children with some hands-on financial experience can help them learn about the complicated decisions surrounding income and budgeting. It will help them learn and understand the importance of making correct decisions about their own personal finances,. These experiences can help them learn about potential mistakes before they can have a major effect on your child’s future.
Teach teenagers, college students as well as young adults about credit cards. Also touch upon debt overall. You should teach your child about responsible credit card use as well as taking on any type of debt even auto loans. You can add your kid as an authorized user to your credit card, or give them a pre-paid card. Make it “real””, hands on learning.
Explain to your child that a credit card does not give you access to unlimited money. In fact, on the contrary, this puts even more focus on budgeting and determining needs vs. wants. You do not need to get into technical terms such as interest and minimum payments.
If your child is old enough, consider taking them to the bank to create a bank account or adding them as an authorized user to your credit card. You can add teenagers as young as 13 to an account. Since they are a minor, you will have to co-sign their bank account or watch their spending with a card.
Open accounts for kids and involve them in investing and finances
Open a savings or investment account for your kids or young relatives. There are all sorts of ways to get kids involved in stocks, bonds, and mutual bonds. Parents can empower them in household financial literacy decisions. As if a kid has a savings account, they are much more likely to be successful financially as well as educationally as adults. Custodial Accounts, UGTMA and UTTMA accounts, Custodial IRAs, and just joint investment as well as savings accounts. Teach them about mutual funds, ETFs, as well as stocks.
Or, just use a basic savings or checking account. Kids can learn about those accounts as well, or even something as simple as balancing a checking account or what interest rates are. Learn how to open savings or investment accounts for kids.
Parents can open a youth account. Many banks and credit unions have options for you to help your child or teenager open a youth savings account. Bank of America, Wells Fargo, Chase, and other major banks all offer these services. Dealing directly with a financial institution can give children valuable knowledge about the world of finances. The child can learn to save and budget on their own., with parental guidance.
Financial literacy games are a great option too. They come in all ages and types, and there are board games, games to use on a smartphone, computer or downloadable version and others. While some of them are free, others have a low cost. Financial literacy games are for kids of all ages too, from elementary school to college age students. Kids can increase their financial literacy knowledge around stocks, mutual funds and other investments. Find games to teach kids financial literacy.
Let the child pay off their bills and debts too. They can deposit money they have earned into their account and use their bank card to spend on what they choose. Then give them the bill to pay. Teach them to look at their banking statements to see how much money they have left. Have them analyze their spending to determine how to help avoid unnecessary debts on a credit card or another other loan.
Use money to help others. You can explain to your child that money can be used to help others that are not as fortunate as them. Create a list of charities or non-profits and have your child pick one they would like to support. They can even use services like Kiva to learn about giving back or loans being repaid.
Teenagers as well as children can take a small portion of their savings and not just spend it on themselves, but donate it to the selected charity. As many financial literacy studies show that spending on others (and not yourself) often leads to more happiness. This helps your child understand the type of impact they can make on the world.
Work with physical (or even virtual) money. In order for children of all ages to fully understand the value of money, they should see it in action. Or use virtual piggy banks or technology such as smartphone apps. Or let them invest in a stock and see the power of compound interest, as their are investment accounts for kids. Nothing like hands on financial literacy classes. In today’s world, it’s common for money to change hands without cash ever entering the equation. Involving your child in a youth account or stock investment will help him or her learn how to navigate these situations long before she is budgeting on her own. Or read about compound interest helping kids.
When children see money being exchanged for products, they are able to understand the purpose of it. Try to pick one store that you go to often and take out money from the ATM before you go to the store. Or do it virtually or even through a game. Only use cash in that store so your child can watch you pay for items with the money. Afterward, to help increase the kids understanding of financial literacy as well as budgeting/spending, review the receipt together to see how much money you started with and how much you have left.
Kids can learn about finances from a job. Some teenagers or college students are dreaming of making some spending money with a part time job or freelance gig. Working, and making/spending their own money (with parental “guidance”) can help kids learn about financial literacy responsibilities in more ways than one.
In conclusion, help kids establish a strong financial future
Most adults today are struggling with managing their own money. Many do not know basic financial literacy terms, concepts, or definitions. Knowing how to responsibly spend, invest and save money is a life skill that everyone needs to have. If you start teaching your children from a young age about the value of money, they will develop financial literacy that is needed later in life. if the parent or adult is not fully knowledgeable either, you the adult or parent can learn about financial literacy along with your kids. Do it as a family.
By Jon McNamara