As a parent, teaching your children about money is an important part of helping them develop financial literacy and independence. However, many parents struggle with starting this financial education because they themselves may not feel confident in their own financial knowledge or they may not know where to start.
A survey conducted by the National Endowment for Financial Education (NEFC) found that 79% of parents believe schools should be responsible for teaching kids about money management and personal finance. Additionally, 75% of parents said they would be more likely to discuss financial matters with their children if they had more resources and information.
Despite parents thinking that this education should reside in schools, Connecticut does not require a stand-alone personal finance course for high school graduation, nor does it require students to take a course with personal finance embedded. The task of teaching children about finances for now, falls on the family.
Let’s Talk About It
Money is an essential part of everyday life. From paying for groceries to saving for a big purchase, your children will encounter financial decisions throughout their lives – just like you have. By teaching them about money from an early age, you can help them develop the skills, habits, and knowledge they need to make responsible financial decisions as they grow older.
Teaching your kids about money can also help to reduce your own financial worries. Money is a common source of concern for many adults and teaching your children how to manage their money can help to reduce the stress in their own lives. It’s not uncommon for a parent who starts talking about money with their children to see they start making improvements on their own situation along the way.
Stress can have serious negative impacts on a person’s physical and mental health. According to the journal Health Psychology, it can be associated with an increased risk of developing a number of health problems, including depression, anxiety, and cardiovascular disease. By reducing financial stress in our lives, our children can be better equipped to handle the challenges and responsibilities that come with managing their own finances as they grow older.
Some parents may feel that they don’t have enough financial knowledge themselves to teach their children. If you feel this way, it’s important to remember that you don’t have to be a financial expert to teach your kids about money. You can start by sharing your own financial experiences and values with your children and learning together.
Others may feel that their children are too young to understand financial concepts. While it’s true that young children may not fully grasp complex financial concepts, it’s never too early to start teaching them the basics, such as the value of money and how to save. Tailor money conversations to be age appropriate. For example, conversations with a five-year-old might be about the difference between a quarter, nickel, dime and penny while conversations with a teenager might be more along the lines of budgeting or saving, for example for that car they are going to want once they get
Begin by designating a good time when family money conversations can happen. For some that is dinnertime and for others it’s during a car ride. These don’t have to be long conversations, think ten-minute blocks of time.
Start with the basics – teaching your children the value of money and how to save. You can do this by setting up a piggy bank or a savings account for them and encouraging them to save their allowance or any money they receive as gifts. Other fun topics might include budgeting, investing, or compound interest.
You can lead by example. If you model good financial habits, your children will learn from your behaviors. Talking through financial decisions is a great way to demonstrate how money can be managed. You can also look for and download apps online that make this easier to do, but make sure you reinforce the need for secure transactions. Conversations about money don’t need to feared; they can be worthwhile for both parents and children. •