As the name suggests, this article is about finance for kids.
How to Teach Your Kids About Money
- As parents, there are a lot of things that we need to teach our children, beginning with the basics of how to eat, share toys with their siblings and on the other matured end, more complicated lessons such as making informed decisions and getting along with others. As a society, we are moving ahead in some areas of parenting, but falling behind in others. In a recent National Financial Capabilities study, only 24% of Millennials (aged 23-35) were able to answer the first three financial literacy questions correctly and a mere 8% of them, answered the complete questionnaire correctly.
- Most parents agree that we need to do a better job teaching our kids, when it comes to money. In 2015, T. Rowe Price reported that 80% of parents didn’t think schools were doing enough to teach kids, when it comes to financial matters. However, parents cannot surrender all of this responsibility to the schools. Raising children and teaching them to navigate through the world is first and foremost a parent’s responsibility.
Get Your Kids Involved
- If you want your kids to have a financial understanding in real, you need to get them involved in house’s financial matters, starting from the basics. Learning theory and research have consistently shown that the more active a learning experience is, the more the learning speeds up and retention.
- How does this work with kids? Start by teaching them the difference between a penny, nickel, dime and quarter. Other than just teaching them the values of the coins, show them how to earn money by completing basic, age-appropriate chores such as making the bed and folding the clothes. As the coins start to add up in their piggy bank, give them the option to buy a toy or to save him / her money and earn interest. Just as any adult wants, they too will love the idea of making money for no extra work!
- Imparting financial wisdom to your kids is a challenging process that may take years. So, if you don’t feel like you’re doing an adequate job of teaching your kids about money, then you are not alone. While the road ahead in taking care of yourself and your children may seem challenging, it’s important to take one step at a time and do the best in your capability to create good habits for them early on.