4 Action steps to teach kids financial literacy

  • Posted by: admin
4 Action steps to teach kids financial literacy

Contributed by Susan Michel, member of EO New Jersey and founder and CEO of Glen Eagle Advisors, which provides advice on investment management and financial planning.

Raising children in an entrepreneurial family is challenging. You want to be a responsible parent and raise financially savvy kids, but where do you start?

April is National Financial Literacy Month, the perfect time to focus on the importance of teaching money to children. Whether intentionally or not, each of our unique relationships with money shapes our children’s relationship with money. How we earn, use, and manage our money largely depends on the information we received from our parents in our childhood.

With the current pandemic, many of us are grappling with having our children at home and the ongoing challenges that come with virtual learning. There are plenty of creative and engaging ways to teach Lifetime Lessons outside of the classroom – even if you’re not a certified teacher!

While many parents understand the importance of teaching their children money, they are often unsure of where or how to start. Here are four steps you can take now to teach your children about money:

  1. Demonstrate and demystify the relationship between work and money: You can do this by involving children in discussions about the family budget. Mealtimes are a good time to talk to kids about money. For example, if you’re planning a family vacation, have them research how much items cost. You can search for flights, car rental prices, hotel options, and local activities that fit your vacation budget.
  2. Open a savings account with your child: A perfect opportunity to teach kids how to budget and save is when they are receiving money from special events or birthdays. Take your child to the bank to open the account or have them help with online deposits. You can have the money you receive split into thirds: one third can be used for yourself, one third for a charity, and one third for a bank account.
  3. Let your child invest their money in the stock market: You can let them choose the stock the money is invested in. Then, every quarter, check the bank statement with your child and see how the value goes up and down. Both a savings account and the wallet are powerful, practical ways to show kids the power of compounding and build their confidence in saving for the future.
  4. Play games with money: Money-themed board games, including Monopoly or Life, are memorable and memorable introductions to understanding how money works. Play “Shop” or “Restaurant” to further motivate children and deepen their understanding of money transactions. Get your children involved when you go on trips to the bank or ATM.

Unfortunately, most children grow up without financial education, whether at home or at school. Since 2016, not a single US state has added personal finance to its K-12 standards. This lack of financial resources has negative long-term effects. For example, nearly 25 percent of Millennials spend more than they make, and 67 percent of Gen Y have savings of less than three months in their emergency fund.

Studies show that children benefit from learning how money works from an early age. These are just a few of the benefits of being a financial literacy:

It is very important to teach financial literacy to our own families, especially our daughters. Studies consistently show that women are less financially literate than men, even after taking marital status, education and income into account. This gender gap in financial literacy is observed throughout the life of women. We as parents can stop this trend and pass on good financial habits to our children.

Parents who talk to their children about financial issues at least once a week are much more likely to have children who say they are smart with money (64 percent versus 41 percent). The small steps we take today can have a large, measurable impact on our children and their future success.

Susan Michel is the founder and CEO of Glen Eagle, an award-winning financial services company providing retirement benefits to business owners and asset managers. Glen Eagle takes an educational, holistic approach to achieving its clients’ long-term goals. Glen Eagle is a WBENC certified women’s company. Susan is a board member of the EO chapter in New Jersey.

For more insights and inspiration from today’s leading entrepreneurs, visit EO on Inc. and other articles on the EO blog.
Author: admin

Leave a Reply