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Teaching our kids about money matters can seem like a daunting task. There's so much to know and understand. It can become so overwhelming that we continue to put off the conversation far longer than we intended. Before we know it, they're earning their first paycheck at their first job and have no idea how to manage their hard-earned money responsibly.
When I was growing up, money was scarce. It seemed like it was promised to someone else long before the paycheck ever hit my parents’ hands. Often times money I earned from babysitting was “loaned” to my parents for bills. I suppose that’s why anytime I earned my own money I wanted to spend it right away on things I enjoyed. Unfortunately, it took more years than I care to admit to learn that wasn’t responsible money handling.
Now that our girls are older (we have a tween and teen), it's super important to me that they not make the same mistakes with money as the generations before them. When it comes to talking to kids about anything important, it can be difficult to know how and where to start. I hope this information gives you a good starting off point and encourages you to keep the conversation going as your children get older.
What is Financial Literacy?
According to Investopia, Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. When you're financially literate, you have the essential foundation for a smart relationship with money.
What Age Should Children Learn About Financial Literacy?
The Institute for Financial Wellness recommends children learn about handling money responsibly from as young as three years old. Learning key financial habits can help children to have a lifelong healthy relationship with money and how they handle it. Financial literacy is imperative to our children’s education and to forgo the conversation would do them a huge disservice.
In the early years of our marriage, we were a family living on a very modest single income. With a toddler and a newborn, coupons were very important to this Momma. Often times, my oldest daughter would sit with me while I clipped coupons or would share in my excitement when I found coupon stickers on products at the grocery store. On our toddler’s 4th birthday, she received some cash in a couple of her birthday cards from friends and family. She opened the card and proudly exclaimed, “Look Mom! Coupons!” Apparently, when I said “coupons are money” it must have really stuck with her.
What If I Have Poor Money Management Skills?
As I mentioned, it took more years than I care to admit before I learned how to turn around my poor money management skills. During those years, I was learning on my own, often times the hard way, about money management. Thankfully, our daughters were very young and didn’t fully know or understand our family budget. Our toddler knew we used coupons to save money and that we valued them. That was the starting point when it came to speaking with our children about healthy money habits.
Sometimes, we have to learn alongside our children. And that’s ok! Allowing our children to see our mistakes and our growth is important. They’ll learn that even Mom and Dad make mistakes and there are opportunities to learn from them.
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Where to Find Financial Literacy Help for Yourself
Many libraries, churches, and county extension offices offer financial education classes such as Dave Ramsey’s Financial Peace University. If you’re looking for a free online option, check out FIS Financial Literacy. They have courses for adults and young adults.
Set up a meeting with the manager of your bank and ask for assistance on budgeting and good spending habits. Sometimes it just takes seeing it in print to fully understand where our money is going and where the problem lies.
Perhaps there is someone in your life that you can trust and has shown responsible money management that can help you understand the pitfalls of your spending habits.
Reach out to your utility providers and ask about budget billing or eliminate services you don’t need. Often times it's those seemingly small monthly charges that can break the budget.
Once you have some knowledge under your belt, try using a free budget app through your bank or other credited financial institution to keep you going on the right track.
Where to Find Financial Literacy Help for Your Children
Toddlers & Preschool Age
Tweens & Teens
Financial Literacy Book Recommendations for Adults
Financial Literacy Book Recommendations for Kids and Teens
Future of Financial Success
Children learn most by watching and modeling behaviors of those closest to them, such as their parents and other caregivers. Therefore, it is us who play a crucial role in setting a good example for them on how to manage money responsibly. Helping our children to understand the value of money and equipping them with the skills needed to manage it responsibly is an essential life skill. We owe it to our children to properly prepare them for the world in which they will one day lead.
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