We often think of money management skills as something we learn throughout adulthood, but it’s actually quite important to introduce financial literacy to your kids at a young age. Read on to find out why!
Teaching the value of money. It’s important for kids to understand the true value of money – this helps to ensure they treat their own possessions, as well as other people’s property, with respect. Consider this example – with a small weekly allowance of a few dollars, your child will quickly understand how much their cherished phone or tablet is worth by calculating how long it would take them to save up that amount themselves. Kids who understand the value of money (as well as what items cost) will also have a deeper appreciation for their parents or providers.
Fun with numbers. One of the easiest ways to demonstrate math principles (like fractions) is to use money as an example. Four quarters is a dollar because quarters are 25 cents, or twenty-five percent of a dollar. When kids start to get comfortable working with currency, they’re also practicing real-life skills that they may very well use in the workplace someday. We also encourage parents to ask their kids to compare prices when grocery shopping – this is a great way to demonstrate the importance of unit costs and how to find the best deal!
Smart spending decisions. If your child saves up some money and decides to spend it on something impulsively, this is actually a good mistake to make. After all, the best time to learn these types of financial lessons is at a young age when the stakes are lower and there are really no long-term consequences. So if your child wishes to make an impulsive purchase that drains most of their piggy bank, let them do it! These lessons teach the importance of savings and money management, and most importantly – monitoring our spending habits.
College expenses. It’s no secret that college can be expensive. Many students rely on college loans, scholarships, and grants to help pay for school. It’s extremely important for high school students to have a firm grasp on their finances prior to college in order to make smart decisions when planning their path through higher education. In today’s age, it’s not uncommon for students to incur college debt between tuition and room and board (if your student plans to live on campus). College expenses should be an educated decision weighing the pros and cons of the financial situation your goal will realistically lead you to. Most importantly, many of your student’s college-related financial responsibilities may be officially tied to them personally. Although parent loans are certainly available to help pay for a child’s education, many of the scholarships and grants students apply for – including federal funds received from the FAFSA – are typically dispersed to the individual student themselves. Between textbooks, parking passes, and tuition, every college student should have some degree of financial literacy prior to making any large commitments.