Teaching Kids About Money Can Also Improve Adult Financial Literacy
Let’s face it: Many of us don’t do the greatest job managing our personal finances. A recent Freakonomics blog post discussed the woeful state of most Americans’ financial literacy, outlining several troubling habits that leave people unprepared to weather many fairly predictable events. Worse yet, many Americans have no idea how to make the most of their money.
So how do we teach kids how to save, invest wisely, and make sound financial decisions when we are treading in the murky waters of money madness? There are plenty of good financial literacy programs to go around, as well as some common-sense tips to smart money.
Hands-on learning is a great way to help kids learn about the complicated world of money. Many students benefit from a program called Junior Achievement. JA of Southeastern Michigan has been teaching critical financial literacy for kids in metro Detroit for more than 60 years. Students receive 27 weeks of classroom instruction that prepares them to make informed and responsible choices that impact their ability to manage personal finances. Students conclude the instruction with a day-long visit to JA Finance Park in Detroit, where they put their learning into action by making simulated purchases and budget decisions.
Making financial literacy a family affair also helps both adults and children improve their money-managing skills. Here are simple tips for parents from the Washington Department of Financial Institutions:
- Start Young. Research suggests that children as young as 3 years old are able to comprehend the concept of money. Play games such as counting or sorting coins.
- Give Your Child An Allowance. Start small; pay them for help around the house. As they get older, teach them how to budget for expenses they will come across as they get older.
- Set Up An Investment or Savings Account. Start around age 8. Introduce them to concepts such as banking, savings, interest, and investing.
- Practice What You Preach. Demonstrate what smart money decisions are all about. Be open about your finances. Include the family on some decisions about budget priorities and purchases.
- Encourage Children To Play Games That Teach Smart Money Management Habits. The Internet is filled with fun games that teach kids about money.
Good money management takes knowledge, discipline and practice. Do you have any money-saving tips to share?