Do you remember how you first learned about managing money? Was it by selling band candy, girl scout cookies, or while playing one of the tycoon simulators that were so popular 20 years ago? If you’re anything like most of the 2,000 parents of children between 8 and 14 who responded to a 2021 survey conducted by OnePoll for Chase Bank(opens in a new tab), you may wish you had become financially literate at a younger age. You wish your parents had played a bigger role in teaching you about money, and you still aren’t comfortable talking about financial matters.
You are not alone. Even though we all recognize the importance of early financial education, and more than 85% of American adults(opens in a new tab) think that K–12 schools should make financial literacy activities for kids mandatory, where students are actually required to complete a class in personal finance in high school.
Unfortunately, that is part of a combination of issues that shows up in research related to how young people today are managing their money. For instance, a 2017 survey of 18-to-25 year-olds(opens in a new tab) revealed that over half of them are spending more than they earn each month. Both the Consumer Financial Protection Bureau(opens in a new tab) and Department of Education(opens in a new tab) agree that young Americans aren’t being properly prepared to manage adult finances.
Why Is an Early Financial Education for Kids Important?
Teaching kids financial literacy is as essential as teaching them good manners.
Budgeting, investing, saving, and paying bills on time are essential skills your kids shouldn’t have to struggle to teach themselves as adults. By teaching them about money when they’re young, you’re laying the foundation for their future success. The children of parents who emphasized the importance of financial literacy early, and encouraged them to save and spend thoughtfully, developed healthier attitudes about money. They won’t always be easy conversations to have with your kids, but you don’t have to do it alone. We’re here to help.
Financial Literacy Activities for Kids
If you are worried about getting started too early with the money management lessons listed below, it’s important to note that children begin to develop an understanding of many basic financial concepts when they are as young as seven years old, according to research conducted by the University of Cambridge back in 2013.(opens in a new tab)
Play Games with Your Kids That Involve Money. Competition is one of the best ways to get kids to retain information. So, playing games with your children that revolve around finances, like Life or Monopoly, will help your kids learn the importance of budgeting and planning for the future.
Give Your Kids an Allowance and the Freedom to Spend It. As soon as your kids understand that we all use money to purchase the things that we want, start giving them a small weekly allowance in exchange for doing chores around the house. This will teach them that money has to be earned. An allowance will also offer your children invaluable first-hand experiences with money. They’ll see the rewards of saving and experience the risks of making impulsive spending decisions early.
Give Your Kids a Place to Save Money. Even before they’re old enough for bank accounts, you can help your kids get in the habit of saving money by giving them a piggy bank or jar where they can deposit their allowances. Learning to save is an essential life skill that will build discipline and demonstrate the virtues of delaying gratification, as well as teach them the value of goal setting.
Show Your Kids How to Be Smart Consumers. You shouldn’t micromanage your kids’ spending, but before they buy something, walk them through comparison shopping for prices and quality.
Teach Your Kids the Basics of Credit. Once your kids are old enough to understand what credit is, consider allowing them to borrow small amounts from you against their allowances when there’s something they want to buy that they’re impatient about. You could even negotiate how much they’ll need to pay you back out of their allowance each week, and remember to keep track of the remaining balance until the debt is repaid. It will teach them downsides of credit and the value of saving.
Financial Literacy for Children Starts at Home
However uncomfortable it is to talk to your kids about money, money management skills learned at an early age will have a lasting impact for the rest of your kids’ lives. Just remember that you're not alone. We are here to help. If you’re interested in getting more involved in your children’s education, visit Connections Academy Online to learn more about tuition-free virtual school.