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Despite America’s ranking as the number one economy in the world, many students finish their education without grasping basic financial concepts. Terms like “credit repair” and “debt consolidation” have become common in the financial industry. To prevent these issues, it’s crucial to introduce children to essential topics such as investing, credit, insurance, real estate, and taxes at an early age so they can play a positive role in our financial system later on.
According to Intuit’s Financial Education survey, most high school students today rely on their parents for financial knowledge. Therefore, it’s primarily up to parents to instill financial knowledge; the younger, the better. Below, I discuss engaging ways to teach grade schoolers about finances.
Key Takeaways
- To build strong financial literacy, introduce basic financial concepts like saving, investing, credit, and budgeting to children as young as six.
- Engage children in family financial discussions, such as income, budget, and expenses, to help them understand the value of money and the impact of financial decisions.
- Leverage resources like the Federal Reserve’s free materials and financial apps to teach kids about managing money and investing in a fun, hands-on way.
What I’m Telling My Clients
A crucial misconception parents make is not sharing the family’s financial situation and goals with the family and providing tools for learning. Sharing the family income, budget, investments, and debt makes the topic of money more relatable.
Use Tools to Your Advantage
Earlier generations suffered from a lack of information and access to education, while current generations struggle with an overload of information and don’t know where to start. I encourage parents to reach out to their state treasurer or regional Federal Reserve offices to find free, fun resources to teach your kids. Many brokers offer paper trading, which allows buying and selling securities without using real money. This is a great way for children to understand the concept of buying and selling securities.
Tip
Many brokers offer paper trading, which allows buying and selling securities without using real money.
Include Your Grade Schoolers in the Family Finances
Involving grade-schoolers in family finances as early as six years old is crucial for their financial literacy and understanding. Parents should discuss family income, budget, savings, insurance, investments, and spending. This helps children understand the value of money, the importance of making informed decisions, and the consequences of financial choices.
For middle school-aged kids, introducing topics such as saving, investing, credit, real estate, and charity can stimulate them to think about money. When paying allowances, match the child’s contributions to their savings, and use the opportunity to explain interest and employer 401(k) matching. For charity, find a community cause they love and volunteer or donate.
When they reach their teenage years, consider using apps like Cash App, Robinhood, and banking apps that allow spending, saving, and investing.
The Bottom Line
Addressing financial literacy early is essential to prevent future financial difficulties. By integrating personal finance education into school curriculums and involving children in family budgeting, we prepare them for real-world financial responsibilities. With these efforts, we can equip the next generation with the knowledge and confidence to navigate the complexities of personal finance, fostering a more financially literate society.