Don’t you wish you’d gotten a practical financial education when you were young? Now you have a chance to make a difference! Teach kids about money and share the personal financial knowledge that you wish you’d received when you were younger.
The vast majority of schools and colleges do not teach kids about money. College students spend 12 years (16 or more if they graduate college) learning skills to earn more money. Yet colleges don’t teach young people how to save, grow their savings, and set financial goals to live their desired lifestyle. We give them a professional education on so many other subjects; shouldn’t we give them a professional education on skills they’ll use every day of their lives?
Youth report that their leading source of personal finance information is parents. According to several commonly-cited studies, more than 60% of children acknowledge relying on their parents for financial knowledge. Unfortunately, most parents face their own financial concerns and have not learned to be comfortable handling their own finances. Many report lacking confidence to teach their kids about money management.
The following ten tips will help:
Tip 1: The Importance of Money
Money itself—that silver coin or piece of paper—is not an intrinsic motivator. It’s what money allows one to do that motivates children to pick up money management skills. Discover your children’s hopes, passions, and dreams. How do they envision their ideal futures? Help kids see that achieving their aspirations is tied to a healthy understanding of money basics. Learning to earn, manage, save, and grow money makes people’s lives easier and helps them reach their goals sooner.
Tip 2: Savings
The biggest financial problem, facing more 70% of Americans today, is lack of savings. Most people will never be able to retire. To help our youth avoid that problem, get them into the habit of saving money young. Help them develop a savings plan as early as possible. Even with a limited allowance income, children can still set aside a portion of any money they receive. Help them set aside a portion of birthday and holiday money, and all other income. By the time they enter their teenage years and start earning their own money, saving will be second nature.
Tip 3: Skill Set Foundation
Developing a good foundation helps our youth gain a financial head start. Help them build key skill sets like time and risk management, ethics, organization, empathy, marketing, belief in living one’s passions, and the ability to communicate with and relate to others effectively. Teaching kids about money is more than just teaching personal finance topics. It’s about helping them identify their own strengths and build skill sets to support those strengths.
Tip 4: Addressing Negative Associations with Money
The majority of us have gone through challenging financial situations at some point in our lives. The fact that many of us never received formal financial education is a likely contributing factor. But even if you’ve experienced financial challenges, you want to avoid passing along a negative money mind-set to children. Frame your talks about money in the positive while still addressing the challenges you went through. And if you’re experiencing trying financial times now, use that experience as leverage to teach your kids about money. Leverage learning opportunities like the Cash for Candy campaign to shed light on any negative financial associations.
Guide your children or students to open checking and savings accounts before they move away from home. Managing their own accounts will enhance their sense of responsibility and get them used to handling their accounts properly. Caution: please be sure to supervise their accounts so they avoid overdraws and keep their banking experience positive.