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April is Financial Literacy Month
How to Teach Your Kids about Money
Managing personal finances doesn't come naturally - it is a learned behavior - and parents are in the best position to teach children about money. In fact, two-thirds of teens look to their parents, not peers or teachers, for financial guidance.
The problem is that many adults rarely broach the subject, if at all. Or they themselves may have poor financial habits. This can have some alarming results. For example:
- More than 1 in 5 teens don't know that interest must be paid on borrowed money
- Fewer than 1/3rd of teens know how to budget their money
- Only 36% of teens know how to open a savings account
- The average undergraduate today owes some $2,100 spread out over more than four credit cards
Bottom line, teaching your kids about money helps them become independent adults.
There are many things you can do to help your child learn money management. Generally speaking, start them early, regularly talk to them about money and give them opportunities to handle their own money.
Here are some specific ideas:
- Experts recommend you start with children as early as 3 or 4
- Give your child an allowance, even if it is small, so he or she can have first-hand experience making decisions about money. Stick to a regular schedule so your child learns to take it seriously. Consider matching any amount put towards long-term savings.
- Take your child to a bank and have him or her open a personal account. Teach him or her how it works, what interest is all about and how to read statements.
- Encourage your child to make a budget. Perhaps he or she might save some money for a long-term goal, share some with charity and spend some of it right away.
- Teach your kids how to shop, compare prices and be smart consumers.
- Show your child some of the household bills and expenses so he or she can learn the real cost of groceries, cars, utilities etc.
Below is a list of resources that might help you to talk to your kids and teach them about personal finances.
Sources: U.S. News & World Report: Personal Finance - Kid Stuff; 360 Degrees of Financial Literacy
RESOURCES FOR PARENTS
Federal Reserve Bank - Cleveland - Education Resources
The Cleveland office of the Federal Reserve Bank offers conferences and workshops for teachers, information about the Federal Reserve Bank and tours for families, individuals and classrooms. The learning center and money museum help visitors to explore the history of money, how it has shaped societies and cultures, and how money plays a central role in our everyday lives.
360 Degrees of Financial Literacy
A volunteer effort of the nation's Certified Public Accounts focusing on life-long financial education to help Americans understand their personal finances and develop money management skills.
Myvesta
Myvesta - A non-profit consumer education organization
The Mint - The Parent's Role
This site includes tips on talking to kids about money and teaching them basic financial literacy from the Northwestern Mutual Foundation, the charitable arm of Northwestern Mutual, partnered with the National Council on Economic Education (NCEE) to emphasize personal financial literacy.
RESOURCES FOR KIDS (or anyone interested in "financial literacy 101")
The Jumpstart Coalition for Personal Financial Literacy
The Jumpstart Coalition for Personal Financial Literacy's direct objective is to encourage curriculum enrichment to ensure that basic personal financial management skills are attained during the K-12 educational experience.
First Gov for Kids - Money
Maintained by the federal citizens information center, this site providing links to some of the best Web sites for kids
Practical Money Skills (English)
Practical Money Skills (Spanish)
A free Web site designed to help educators, parents and students practice better money management for life.
It's My Life - Money
Information, discussion and games on PBSKidsGo about money issues for "tweens" funded by the Corporation for Public Broadcasting
Sense & Dollars
Information for teens about how to earn, manage and save money from Maryland Public Television
For local resources and additional information about saving money, click here.
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