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Everyone learns about money from someone. It can happen directly or indirectly, but it’s bound to happen eventually. The old way of leaving kids out of any and all money conversations can be limiting and dangerous to their future financial health.
Rather than waiting for them to learn about it from someone else or allowing your silence to indirectly show them that talking about money is awkward or taboo, we recommend seizing the opportunity to teach them. You can be a positive voice and a guiding light before they make their way out into the world to learn about finances from uncertain sources.
And the best time to start is right now.
Less than 25% of students across the United States have access to personal finance education through their school. We’re happy to see that this number is on the rise - it was 16.4% in 2018 - but it still leaves three out of four students without access to personal finance education.
It’s up to parents to fill in the gaps, so kids learn about money from somewhere other than social media. But since most adults were raised in houses that didn’t discuss money, it can be hard to figure out where to start. Here are some basic topics we recommend covering with your kids so that tentativeness doesn’t carry on to another generation:
You may find that your kids already know more than you realized. Or you may find that they have a lot of questions. Try to answer them openly and honestly so that they feel safe coming to you to discuss potentially difficult topics again in the future.
There are many ways to help your kids improve their financial literacy at home. For example, saving a portion of your income can be demonstrated with piggy banks for younger kids or joint savings accounts for teens.
Similarly, you can teach them how to create a basic budget with a notebook and colorful pens or in an Excel spreadsheet. Kids typically respond well to visuals, so try to show them how money works by paying in cash or showing them a copy of your monthly budget.
When they’re old enough, including them in household money meetings may help them feel more connected and eager to learn. The addition of an allowance is a great way to demonstrate how to budget based on your income.
After a certain age (typically 16), a part-time job can help teach them about financial responsibility and give them a sense of freedom and the opportunity to make their own money. Then, they’ll have real experience to apply to all the money lessons you taught them.
The following sources are full of other helpful financial tips broken down by age range:
It’s never too early to start learning about personal finance. Whether this means putting pennies into a piggy bank or applying for part-time jobs, you can help your children get ahead, starting from where they are right now.
Having regular money conversations with your children can help them build the skills they need to be financially secure in the future, make positive money choices, avoid debt, achieve their financial goals, and understand the true value of money.
It may also give them the confidence they need to tackle difficult topics and unexpected financial challenges when they inevitably arise in the future. Avoiding money conversations will only hold them back or lead them to learn from less-than-reliable sources.
When the time is right, you can help your children develop a positive relationship with money and give them a headstart on their financial future.