Learning about money is the foundation of financial literacy and the key to achieving financial security. Yet financial education isn’t part of the curriculum in most U.S. schools.
Only eight states have fully implemented a requirement for all high school students to take one semester-long personal finance course before graduation, according to Next Gen Personal Finance’s report. Ten other states are in the process of implementing this requirement.
That means parents and other adults may need to step in to teach children basic money concepts.
Now here are 3 money lessons that financial experts say may help improve their knowledge from an early age through high school graduation and beyond.
1. Start early
Starting to teach children about money at an early age can set them up for a lifetime of financial success. Even very young children can begin to learn basic concepts such as saving, spending, and budgeting. One way to make learning about money fun for children is to use play money or to set up a pretend store where they can practice counting and making change.
When children are involved in everyday financial activities, they develop important skills such as critical thinking, decision-making, and problem-solving. By teaching children how to save and budget, parents can help them learn the value of money and the importance of delayed gratification. This can also help them develop a sense of responsibility and independence.
Parents can also use everyday situations to teach their children about money, such as discussing the cost of groceries or explaining how bills are paid. When children see their parents making smart financial decisions, they are more likely to follow in their footsteps and adopt similar behaviors.
By starting early and making learning about money fun and engaging, parents can set their children on a path towards financial literacy and success. These skills can benefit children throughout their lives and give them the tools they need to make smart financial decisions as they grow older.
2. Teach them to save
Teaching kids to save money is a crucial life skill that can help them become financially responsible adults. One way to start is by encouraging them to set a savings goal, such as saving for a new toy or game. This helps them understand the concept of delayed gratification and the importance of planning and working towards a goal.
Parents can also help their children open a savings account, which allows them to see their money grow over time thanks to the power of compound interest. It’s important to explain to kids how interest works and how their money can earn more money over time.
When children reach their savings goal, it’s important to celebrate their achievement. This can help them feel proud of their accomplishment and motivated to continue saving. It also reinforces the importance of setting financial goals and working towards them.
By teaching kids to save money from a young age, parents can help them develop healthy financial habits that will last a lifetime. These habits include setting goals, creating a budget, and avoiding unnecessary spending. As kids grow older, they can learn more advanced financial concepts such as investing, debt management, and retirement planning.
3. Encourage them to earn money
Encouraging your kids to earn their own money is a valuable lesson that can help prepare them for adulthood. It can teach them responsibility, independence, and the value of hard work. There are many ways to help kids earn their own money, depending on their age and abilities.
For younger children, you can give them chores to do around the house and pay them for their work. This can include tasks like cleaning their room, taking out the trash, or washing dishes. You can also encourage them to sell homemade crafts or baked goods to family and friends.
As kids get older, they may be able to take on part-time jobs outside of the home. This can include jobs like babysitting, dog walking, or mowing lawns. Not only will this help them earn money, but it will also teach them valuable skills like time management and customer service.
If your child has an entrepreneurial spirit, encourage them to start their own small business. This can include selling items online, offering tutoring services, or starting a lawn care business. Not only will this help them earn money, but it will also teach them valuable skills like marketing, budgeting, and business management.
Whatever method your child uses to earn money, it’s important to teach them the importance of saving and budgeting. Encourage them to set aside a portion of their earnings for savings and explain how compound interest works. This will help them develop good money habits that will serve them well throughout their lives.
