Over the past few years, I have heard a lot of buzz about the lack of financial literacy especially in the minority communities. Financial literacy can begin as early as you want it to, and honestly the earlier the better. For instance, my two year old already has a piggy bank, bank account and college fund and recognizes what money is. When she is a little older, I will show her how to save money.
Financial literacy begins with recognizing currency. If your child goes to the store with you, it doesn’t take long for them to realize that money is needed to get things they need and want. However, they also need to understand how to obtain money. This is why people work. But it is also more than this.
Understanding credit is a big part of this as well. When I went to college, I was bombarded by companies that offered cool gifts to open a line of credit. If you don’t know anything about credit, all you see is the cool offers, and not the interest rates or the fact that it is not free money. Or the power of having a credit score that is over 700. So how can you introduce financial literacy to kids?
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- Take your kids shopping with you: It’s never too soon to introduce the word ‘budget’. Let your kids know the truth. “We can’t afford this right now?” But don’t make it seem like it’s a bad thing that you can’t. Set a goal together and try to save together to get to that goal. Also, show them how to look for a sale! This will help them to realize that there is more than one option out there.
- Play games that involve money: Two games that I remember playing that involved money were Monopoly and Life. Life was my favorite one but Monopoly really taught how to save and invest.
- Give an allowance: I personally never received an allowance growing up, but I feel like it will help kids with financial literacy. Now it doesn’t have to be a huge allowance. I’m putting a dollar a day in my 2 year olds account just so she will have something when she’s old enough to recognize it. There are mixed feelings about allowance from a lot of people. Don’t just give money, allow your child to earn money and teach them how to save it. Make saving a game if you have more than one child. Buy a piggy bank that they picked out themselves to keep their interest.
- Open an account for your child: Nowadays, kids see adults making purchases with a credit or debit card. To some kids, it appears that we have a magical card that we can swipe endless times to make a purchase. Show them the behind the scenes of the cards. Tell them that there is a limit. This is why cash works better for some people because they can see what they are spending. Do what works best for you but show your child both ways. Also show them how to balance a checkbook.
- Teach them to identify currency and count money: With common core, money is introduced in 1st grade. However, you don’t see it come up that often in the following grades. I remember learning how to count coins at home. You can use a money kit to learn how to play with money.
Financial literacy is an imperative part of being a human being. We grow up and decide what we want to be in order to earn money. What ways do you suggest teaching literacy to kids? What’s a tip that you can see yourself using? Leave a comment below.
-Liz
