Tips for Teaching Financial Literacy to Your Kids

One of the best things you can do for your children is to teach the basics of financial literacy. Right now, financial literacy rates are fairly well, with many Americans unable to answer even basic questions about how money works.

Additionally, there are concerns that schools that do teach financial literacy classes don’t address real world budgeting issues. This means that parents need to step up their efforts to teach their kids about money.

If you are a parent, it makes sense to help your kids learn about money from a young age. Here are some tips that can help you increase your effectiveness as you teach your children about money:

Talk About It

It’s hard to show your kids the real-world applications of money if you don’t talk about it in your home. My husband and I discuss money in front of our son, and we talk about our financial decisions with him. We try to keep things age-appropriate for him, but the fact of the matter is that he hears financial discussions, and knows that understanding money is an important part of success as an adult.

Talking about money at home provides your kids with an example, and opens the door to talk to them about your successes and your mistakes.

Encourage Them to Make Decisions

You should give your children the chance to make decisions with their money. Whether you give an allowance, or whether you have them earn money through chores, young children should have some money that they can make decisions with. Talk to them about saving up, as well as other topics, such as giving to charity, and setting spending priorities.

We also let our son make mistakes with his money. When he spent on impulse, he ended up with a toy he didn’t really enjoy. However, that purchase meant that he didn’t have what he needed for a toy he really wanted. We talked about setting priorities and not spending before thinking through the purchase. My son hasn’t made an impulse purchase since. Now he thinks about it, works out what he has to give up to make it happen, and has his dad help him shop around online before he makes a purchase.

Helping your kids make decisions now, and talking about it, can promote better decision-making in the future.

Our next lesson, since our son is approaching his teen years, is likely to be in investing, and letting him learn about choosing funds and stocks, and picking a high-yield savings account over one that pays less in interest.

Use Technology

You can also incorporate technology in your lessons about money. My parents set me up with Quicken when I went to college, but I could have used it with my checking account earlier. You can encourage your child to use apps to track their spending, and there are even games that can help teach money concepts. Since the world is increasingly moving toward technology, helping your child learn to use these tools to manage their money now can give them familiarity with it later.

What are some of your tips for helping your children learn about money?

About the Author

Miranda writes about financial topics for several web sites. Her blog is Planting Money Seeds, and her book, Confessions of a Professional Blogger, is available on Amazon.