Easy Ways to Teach Financial Literacy in the Home
Studies have continued proving that U.S. teens lack serious knowledge when it comes to personal finance. With the lack of education provided through public school systems, it becomes the responsibility of outside resources to financially educate our youth. Organizations such as Junior Achievement are still making strides towards bridging the gap. Yet, we as parents can still step up and help to further our children’s financial understandings.
Elementary Aged Children
While many families already have an allowance or earning system in place, financial literacy comes from truly understanding the value of money. The “work for a reward” system is an excellent way for parents to show their children that money does not, in fact, grow on trees. During the money-earning process, it is important for parents to present their children with opportunities to make money-based decisions. For example, if a child has saved up $20, the parent could give the child various options for spending the money. Whether allowing them to choose between picking out a new toy or going for ice cream, the child can begin to grasp opportunity cost. Even if there is a clear “right” choice, it is better to let the child discover the mistake on their own, rather than trying to correct them.
High School Aged Children
As children get older, they are not only closer to independence but they also have a greater understanding of the true value of money. While many teens will be getting their first jobs around this time in life, it is important that parents encourage the concept of saving. A good practice that many parents should consider is having their young adults sit down and help with yearly taxes. This experience will give them a visual of where money is allocated throughout the year. They can gain an understanding of one of the more challenging financial ventures of adulthood by watching and learning.
Another way to involve your adolescent in financial literacy is by helping them to manage a budget. This activity is ideal for teens who have just started their first job or even for those who receive an allowance. The budget won’t likely include bills and mortgages as parents would but you can incorporate food, gas, and leisure activities into theirs. Making them fully aware of the costs of everyday items is a practice that can set them up for a successful future of smart spending and saving.
It is up to us, the generation of today, to educate the generations of tomorrow. This not only includes values and life lessons but the critical importance of finance. Until the education systems find ways to incorporate financial literacy into their curriculum we must do as much as possible to instill the knowledge to our youth.