You Are your Child’s First – and Best – Financial Teacher
You are never too young (or too old) to learn about money. My first lesson about money was that candy bars cost 10 cents at the corner store in my small town, but only 9 cents at the big grocery store.
I also remember selling Kool-Aid on the sidewalk in front of our house. The flavor crystals, sugar, water, jug and glasses all came from our kitchen, so at 5 cents a glass I concluded that selling Kool-Aid was an exercise in pure profit.
Walking past the “Bank On It” exhibit in the Tacoma Children’s Museum last week, I saw 5-year-olds – who were still working on the art of sharing – discovering the more complex skills of budgeting and saving. They were playing (and learning) in these exhibits using “money” to make purchasing and savings decisions.
These preschoolers were learning a lesson that it takes most of us a lifetime to master: financial literacy. And watching them move from a “spend-it-all-on-ice-cream” decision reconsidered in favor of a “maybe-I’ll-save-some-for-cookies-too” mentality gives me hope for the future.
It’s a lesson we should all remember. Recent headlines confirm that even experts on Wall Street and in Washington are still learning it. Bailouts of financial institutions and industries, the distress caused by mortgage rollovers, and even teenagers getting into debt trouble are all cause for concern.
Through my work, I see both the benefit of providing families with the knowledge to avoid financial failures and the consequences when people lack an understanding of money management.
When we teach our children how to save money, make a budget, make thoughtful buying decisions, read a bank statement, bank online, use a debit or credit card, understand loans and use good judgment, we help them build immunity to predatory lenders, overdrawn accounts and housing foreclosure. We give them skills to survive and prosper.
Parents can help their children navigate an increasingly complex financial world by teaching the basics of money and finance at an early age. Like the preschoolers learning to budget for ice cream and cookies (not to mention candy bars), teaching our kids the basics of money and the benefits of saving can have enormous benefit down the road.
Where to begin? One of the basic skills of financial discipline is managing money, as opposed to just spending it. There are several good online resources for ways to explain money management to kids at each developmental stage. Try www.themint.org or www.jumpstart.org.
You can also use simple games to teach younger children valuable lessons. The National Council on Economic Education has a workbook full of ideas: “Financial Fitness for Life: The Parent’s Guide to Pocket Power.” There, you’ll find resources on story books that teach financial skills, and family activities that reinforce financial messages, such as “Goods vs. Services.”
In this activity, parents help children identify three “goods” and three “services” found at home. Children draw pictures of the goods and services, and use old magazines to clip photographs that illustrate them. This activity helps even young children distinguish between goods and services.
Schools are starting to offer more robust financial education as well. Check with your local school board to find out how you can support more financial education in your school system.
Some schools are partnering with Junior Achievement to provide financial education. Junior Achievement has exceptional experiential learning opportunities for children and young adults. In a dozen or so states across the country, children visit a Junior Achievement Finance Park, where they learn about how money works in real life.
They are randomly assigned an education level, profession, income and life situation (they might be a single parent, married couple, single person).
Based on their life situation, they go from one storefront to another in the village, setting up bank accounts, applying for mortgages or choosing to rent an apartment, buying a car or getting a bus pass, paying for groceries and clothing, and supporting children. They make decisions about how much money to spend on what, as long as it fits within their means.
The results are astounding. They quickly understand the value of trade-offs needed to make the budget work. And they might go home with a little more empathy for their parents’ financial decision-making, at least for a day.
Preparing our children to be money-smart, or financially literate, may be one of the most important and challenging responsibilities we have as parents.
The best place to learn financial literacy is at home. Talk about financial decisions with children at every opportunity. Involve children in money activities, such as saving for a special vacation over a period of time.
Be financially responsible yourself – role-model what you want your children to do. Take a class and increase your own financial knowledge. Have a family budget and retirement plan and share it with your family.
When you pass up some ice cream and cookies to create and build a stronger savings account that supports your financial goals, you teach by example. Meet with a financial professional to accelerate your financial literacy journey.
Patricia Akiyama is director of government relations for Russell Investments. This article is part of a series of monthly columns by Russell associates.
Source: TheNewsTribune.com
http://www.thenewstribune.com/business/story/499949.html