Financial literacy: Raising money-savvy kids
“Parents want their kids to be financially savvy, yet many of them aren’t doing the best job of teaching them how to handle their money,” said Darla Mercado in CNBC.com. About nine out of 10 parents said that they don’t talk with their kids regularly about saving, according to a recent survey by Ally Financial. Even so, 83 percent of parents said saving is one of the most important financial skills for children to learn. Apparently, the “taboo aspect” of money “is getting in the way of some very productive steps moms and dads could be taking with their children.” Parents can start to make money matters less off-limits by looking for everyday opportunities to talk about finances, said Tom Anderson, also in CNBC.com. That could be something as simple as how you calculated a tip, or what you saved with coupons during a trip to the grocery store. “These conversations don’t have to be earth-shattering,” says Roger Young, a certified financial planner at T. Rowe Price.
Money can seem “almost invisible” to kids, said Joan McFadden in TheGuardian.com. In this age of online shopping and internet banking, many of them rarely handle hard currency. “If they do, it tends to be notes coming out of a cash machine, so start young and tell them that the bank is looking after the money you earn.” Handing out pocket change starting when children are about 3 can help them understand that money has value and can even be used to buy things they want. “A good way of encouraging saving at any age is to reward them, either by matching what they put aside or agreeing to put something toward it.” Shopping trips are a “great opportunity” to learn about needs versus wants, said Trae Bodge in USNews.com. Try giving young kids a “treat budget,” which they can either spend throughout the day or save for another time.
Avoid linking an allowance to chores, said Beth Kobliner in PBS.org. Pitching in around the house should be a part of family life and helps teach kids responsibility and the importance of helping others. The point of an allowance is to teach financial literacy. Of course, you can pay your kid for odd jobs that go beyond his or her usual responsibilities, “but that’s work, not allowance.” Too many parents have been foiled by kids who decide that it’s worth losing $10 to leave their bed unmade. “Unless you’re willing to negotiate each time you want your kid to empty the dishwasher or put his clothes in the hamper, steer clear of systems that pay per chore.”