How to Transform Your Child into a Responsible and Smart Adult Consumer
Teaching children about money is not a priority in America, and it needs to be. The Council for Economic Education’s 2014 Survey of the States (released Feb. 12, 2014) confirmed what economist and former Chairman of the Federal Reserve Alan Greenspan has been saying:
“The number one problem in today’s generation and economy is the lack of financial literacy.”
The survey’s findings painted a grim picture.
- The current student loan debt is $1.3 trillion and counting, and it’s more than the national credit card debt.
- 75% of credit card-carrying college students were unaware of late payment charges, and 81% underestimate how long it will take to pay off their credit card bills.
- Only 56% of teens plan to save some of their income. That’s down from 89% in 2011.
- Only five states require a stand-alone course in personal finance for high school graduation.
And perhaps the most troubling statistic of all is this one:
- One-third of parents say they’re more comfortable talking about smoking, drugs and bullying than about money.
At LiSA Initiative, the grassroots movement sponsored by First Financial Security, Inc. (FFS) that I chair, we see these findings as an opportunity for parents to get out of their comfort zone and change their children’s future by helping them become financially literate.
We believe parents can make a difference by preparing their children to become responsible and smart adult consumers. The work they put in now to ensure their children understand how money works will affect not only on their kids’ future, but that of the American economy, as well.
So, whether it’s across dining room tables, in carpool lanes, in the backyard tossing a football, or simply in those quiet moments when preparing for bed, parents should begin talking to their children about money.
It’s never too early or too late to start a conversation about personal finances with your kids. The younger your child is when you start instilling good financial behaviors, the better.
Children begin learning about money in pre-school. You can use playtime and games to encourage financial learning even in children as young as 2 and 3 years old. Your toddler may not know how much a penny or dime is worth, but you can teach him to recognize the former by its brown color or the latter by its smaller size. (Anna Attkisson. “Teaching Kids about Money: An Age-by-Age Guide.” Parents.com.) By playing “store” with your daughter, you can plant the seed that the things we need, groceries for instance, must be paid for with money.
Find ways for your younger elementary school-aged daughter or son to earn money. Have your son help out with chores around the house. Or, have your daughter not only help you clip coupons, but go with you to the grocery store and match the coupons with the items on sale. Teaching children about money can happen almost anywhere.
Initially, your children can keep their earnings in a piggy bank, but you should take them to the local bank to open a savings account in their name. As they deposit what they make each month, they can learn about the role banks play in our economy and the banking services that they may use throughout their lives.
The elementary years are when you’ll help your son or daughter begin learning basic concepts that will form a foundation for continuing financial education. You can introduce such concepts as paying yourself first, a need versus a want, discipline and patience in saving, how credit works, and much more.
As children reach their teen-aged years, the lessons will naturally focus on more complex financial concepts. This is when you need to introduce information about investing, including why and how it’s done, the risks and benefits, and more.
Select a stock, such as Mattel® or Sony®, for you and your son or daughter to follow online. This is a great way to see the day-to-day market fluctuations and how world events may impact a stock’s value, for example.
Stored value cards are a great way to teach your kids how to live on a budget. Parents can load these cards, offered by major credit card companies, with a specific amount of money. Your kids know the amount available and must learn to live within their means. Introduce the concept of good debt, such as a home mortgage or car loan, and share with them that they should only carry the amount of debt on a credit card than they can comfortably pay off each month.
During the high school years, teens often establish their own businesses – mowing lawns, babysitting, dog walking, or housesitting. This is an excellent opportunity to introduce entrepreneurial concepts to them, such as explaining how to establish and run a small business.
Finally, if you have daughters, you may need to give them an additional pep talk. A recent report found that a “gender bias in math grades given to girls and boys at the elementary school level” still exists today. (Linda Carroll. “Teacher bias may help discourage girls from math, study finds.” Today.com. Mar. 9, 2015)
The study suggested that girls receive lower scores based on their gender and are being discouraged from taking “higher levels of math and science” in school. If a girl thinks she can’t do math, she’ll stop trying. We need to eliminate any and all barriers to learning.
Remind your daughters every day that they are smart and if they want to, they can do anything. That’s true for our sons, as well. If we provide our children with a solid, financial education, doors to opportunities will be thrown open wide for them.
LiSA Initiative is taking the lead in the fight against financial illiteracy by bringing financial education to America’s youth.
LiSA began by focusing on teaching Financial Literacy to adults, but we knew we must expand our focus and efforts to include the next generation of consumers. Teaching children about money is that essential.
In early October 2015, we introduced a new financial curriculum through our LiSA Literacy Project designed for children and young adults. Through this curriculum, sponsored by LiSA in partnership with FFS and the National Financial Educators Council, we are teaching money concepts, such as savings, banking, budgeting, credit and financing a college education, to America’s children.
Our goal is simple: Provide children with sturdy financial footing before they ever start making financial decisions that could negatively impact their lives far into the future.
Financial literacy is a gift that can never be taken away from them. It’s their ticket to the world.