The Future of Financial Literacy: Talking Money with Kids
Nobody’s born a financial genius. But as you grow, you get
the opportunity to learn from those who’ve done it before. Just as you start to
feel there’s a few financial boxes you’ve checked off, it might be time to swap
chairs and become the one giving advice versus receiving it. Whether they’re
nieces and nephews or your own little ones, answering financial questions and
helping kids understand
money is a skill all its own. And it’s one worth practicing.
Experts say that kids need to develop a good, solid
understanding of money – what it is, how it works, and its role in their lives
now – early on, but that parents are more comfortable talking about literally
almost anything else, even serious topics like drugs and alcohol or school
bullying. It’s a lot of responsibility to start to have ‘the money talk’ with
young minds, but where can you start? Consider these options to help fire up a
conversation now so they can seek you out for some practical money talk in the
future.
- Where Does Money Come From?
It’s not something you’ll find on trees: teaching your kids
that money comes from hard work is a terrific lesson to help them understand
the cycle of money in our lives. Getting them started with an earned allowance
– washing cars, mowing lawns, or helping out with other housework – means
you’re already showing a great preview of how they’ll be able to support themselves
later on in life. But they may have questions about how you do it if those
three options aren’t your chosen professional path.
You can offer them a quick look back of your own to help
them connect the dots. Let them know how you picked your career and help them
see the steps from where they are today to something that might fulfill them in
the future. If they’re the right age, you might also think about helping them
see the value in tasks that align with their interests, like caring for
neighbor animals when owners are traveling if, for example, they have their
sights set on being a veterinarian.
- How Do I Afford Things?
Having money is one thing, but not having a plan about what
you do with your money is like setting out for an expedition without a map or a
compass. Budgeting isn’t always the most exciting topic, but it’s a vital one
to help kids achieve money-related
goals. Good savings habits now help kids buy they things they need and want
– a lesson they’ll remember for a lifetime.
I still remember the first thing I ever saved up to buy, and
the sense of pride I had as I paid (completely in change) for a plush fish that
I dragged all through preschool. I had saved for months and asked, probably
non-stop, if the toy shop still had them on the shelf or not. We would walk
through every so often to confirm they were still there, and I couldn’t wait
for the day I would have my own. I would sit down with a parent and count out
my change periodically, so I’d know my progress. Eventually, I had enough saved
to make my purchase, and I was driven down to the toy shop after work by my
dad, where I handed over my bag full of hard-saved change and counted it out
with a very patient clerk in an otherwise empty shop.
Though the toy shop has long since closed, I’ll never forget
the value of learning at four years old the sense of accomplishment that saving
could bring. It sticks with you.
- What Else Can I Do with It?
Money is more than just the fuel that powers commerce and
business, it can also be a powerful force for good. Putting together a budget
often includes a line for charity. Finding the right time to chat with kids
about what’s important to them means you can think together about channeling
something good, whether it’s money, activities, or both, toward a deserving
charity you both support.
It can be something as near as helping a local community
organization or as far away as sending money to children overseas. Just make
sure you help them do their research and confirm how much of their donation (if
it’s monetary) goes to help those in need.
- Where Can I Get Help When I Don’t
Understand Things?
It’s important to let kids know that there’s a lot to learn
about money, and you don’t expect them to know it all. But being a partner to
help answer questions as they come up means that you can have a conversation
about it when they’re ready. While we do more and more of our banking online,
it’s great to involve kids when you do have business in person: help them see
that there are people to help and that there’s always more you can learn.
Especially with something like credit that comes a bit
later, resources like the ones you can find here at Experian.com/education can
help them get a preview of the basics on how to start smart. But there’s no
substitute for coming to a trusted, personal source like you for some specific
firsthand learning. How’d you do it? What was your biggest surprise?
- What Else Should I Know?
There’s a whole lot more than just saving and budgeting to
understanding your finances. Sometimes the most valuable question is” What have
I not even thought about yet?” From putting together a checking account for
your youngster (and checking in on it online), to starting a regular credit
cadence just before college hits with a secured credit card, to learning a
little about investing, there are other topics to touch on, too. Again, don’t
feel like you have to be a masterful veteran to talk knowledgeably about your
own experiences. Plus, it may give you the opportunity to do a little more
research on the ‘why’ behind something you know to be true- like why
diversifying your stock portfolio is a plus. Treat it as an opportunity to get
good answers and grown your own learning, too.
- Taxes Are a Real Thing
Don’t let taxes be a surprise as kids start to build a
savings strategy. Letting them know that taxes come out first helps them avoid
a big
surprise later on when take-home pay and salary aren’t equal in the
future. And, it’s part of doing our part as citizens. While kids are still
mapping out their cashflow from weekend chores, the amount you help them set
aside now could be auto-added into a college savings plan that will mature and
can lend some much-needed help down the road.
There’s no shortcut to helping a young mind get money-smart.
But as a person of importance in their life, your voice has meaning and value.
If you don’t have all the answers, you can absolutely reach out for more good
info to give them a better understanding of their finance-related questions.
And remember that family elders – grandparents, great aunts and uncles and the
like – whose experiences can make them family financial MVPs would love to help
you both grow your knowledge and build a valuable financial experience for you
both.
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