During this month of holidays in which gift-giving is the norm, monetary gifts can be the most meaningful. Gifts of money offer your child choices: Save. Spend. Give. Invest. They’re all great options, and your child’s financial literacy will grow with your support. I call that a gift that keeps on giving.
You might feel your child is too young to learn about money firsthand, but the perfect time to start teaching is once kids reach school age.
State Funds for Literacy Education
Being able to understand and effectively use financial skills is so essential to creating better financial futures for children, teens, and young adults that State Superintendent of Public Instruction Tony Thurmond recently announced the availability of $3.6 billion in block grants that can be used to expand financial literacy course offerings and an additional $1.4 million in private funding for high school teachers to receive related professional development. The hope is that the next generation of consumers will be more financially savvy.
As a parent of young teens, I’m thrilled about this. I want my kids to have the best quality of life possible and to learn that how they manage their money is a big part of this. It’s important to me that they develop a healthy relationship with money and can plan for large expenses, make wise spending decisions, manage debt, and grow their assets.
I’m fortunate that I feel equipped to teach my kids effectively, but that might not be the case for all parents. You might be relieved that the California Department of Education has stepped in with funding for financial literacy and that it’s working toward joining other states requiring such a curriculum. The only related requirement in California is that high school students take one semester of economics.
Real World Experience
Kids need real-life, hands-on experiences with money to learn how to manage it, and teaching money management and budgeting habits takes time, experience, consistency, and patience. Empowering them with opportunities to make decisions gives them confidence and helps shape their attitudes about money and behaviors related to spending, saving, and giving.
Being a parent puts you in a prime position to model healthy habits and attitudes about money and provide opportunities for your kids to earn, learn, and demonstrate their understanding of using it responsibly.
A good goal is to have your child be comfortable talking about money while giving them some basic knowledge they can build on, along with tools and resources for learning more. And, for their best chances of success, they need a working knowledge of handling finances long before they leave the nest.
Allowance or Paying for Chores?
Offer an allowance for chores around the house or cleaning one’s room. If that doesn’t sit well with you, consider paying your child for special projects or asking them for ideas of how they could earn money. They’re more likely to stay engaged if they have a say. Have your child think about short- and long-term goals and divide earnings for saving, giving, and spending.
Whenever you can, have them conduct transactions for the things they want in cash with money they earned or received as a gift. Ask them to keep receipts and add up purchases weekly so they can reflect on their choices.
Skills for Each Age Group
Kindergarteners can learn to identify coins, their value, and count money. Teens can understand creating a budget and using checks, cash, and credit cards to buy things they want and pay bills. If you run out of ideas for building your child’s financial literacy, look at a financial glossary and choose terms that make sense to introduce according to your child’s age.
Depending on your child’s interest, the teen years are a perfect time to introduce more complex concepts such as earning or accumulating interest and the differences between bank accounts and brokerage accounts. If you don’t feel confident in this area, learn together. Research types of investments and how they can earn income from dividends and capital gains, for example.
Tools for Parents
You’ll find tools, guidance, and youth-centered resources for children in Kinder through 12th grade on the California Department of Education websites, banks, and brokerage firms. These include articles about saving and investing, apps, games, podcasts, and challenges and competitions. Your teen might even enjoy a subscription to Money magazine or a book for youth about finances.
Whatever methods you choose for teaching financial literacy, be assured that this is one investment you can count on to pay off.
WENDY J. ROSENTHAL is a writer, credentialed educator and tutor, and solopreneur of a boutique marketing company. She is certified in Youth Mental Health First Aid and is the parent of two teen boys. She and her children reside in Salinas with their rescue pup Sherman.