Teaching our kids about money at a young age can increase their financial health as adults. The importance of financial literacy for adults can’t be emphasized enough; without it, we leave ourselves open to a variety of issues and problems that can be devastating financially. Studies have shown that children, teens, and young adults who understand certain topics about money are more likely to make smart financial choices in the future. Here are some guidelines and resources for parents teaching financial literacy at any age:
While toddlers may not yet be able to fully understand the value of money, they can learn things such as the names of coins. You can play a coin identification game such as Coin Counting and introduce them to other free apps. These games can help young children learn what bills and coins are worth.
Another way to help your young child learn about finances is by playing “store” with them. Your child will begin to understand the basics of commerce by exchanging play for money for goods.
Shopping can also be a great teaching tool for younger children as they’ll learn that money has a limit and that your money only buys so much.
Make it a point to bring your child to Peoples Bank and have them open a savings account once they start receiving an allowance. From there, teach them about saving birthday money or money earned from odd jobs. This moment is a great opportunity to teach kids about money and practical tips to begin saving. Then as their savings account grows, it becomes a great opportunity to discuss the concept of interest.
Most teens apply for their first job or internship at this age – and spend plenty of money on clothes, games, movies, electronics, and the like. That said, it’s an ideal time to learn about budgeting money while saving for major expenses that could be forthcoming in the near future – such as a car. This is a great age range to teach kids about money in a variety of other ways including learning what a credit score is and why it’s important.
Your teen may also become interested in the stock market. Help your kids understand the risks and rewards of the market and you can pretend to invest in companies they are interested in. Track the financial news and value of the stock(s) on a daily basis – which is something the whole family can take part in.
Raising your children to properly understand and value money can be difficult, but we believe it’s well worth the effort. Contact your local Peoples Bank branch to learn more about setting up an account for your son or daughter today.