Kids and Money: How to Improve Their Financial Literacy
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Do you remember where you learned to manage money and debt? As financial literacy is not a topic that is always taught in schools, you most likely picked up your budgeting and financial skills from your parents. So, as a parent, are you teaching your kids about money?
Providing your children with the proper tools and resources will help them become financially responsible adults as they will be more comfortable in dealing with finances as they get older. Here are some financial literacy tips for all age groups to help parents introduce their kids to financial responsibility:
- Elementary school: At a young age, introduce your child to the concept of physical money and how it is used to purchase goods and services. Show your kids that in order to get a toy or ice cream, you must give money in exchange.
- Middle school: As they get older, your kids should learn the responsibility of earning money and paying for things. Encourage them to save the money they get from chores or gifts, and use it to purchase an item they have wanted for a long time. This will show them it takes hard work and patience to buy certain things.
- High school: At this age, your teen should learn more complex financial topics like banking, debt and equity. Explain to them the difference between a debit card, a credit card, a savings account and a chequing account. This will teach them that each has its own purpose and should not be used in the same way.
- College/University: As young adults on their way to financial independence, teach them the importance of budgeting and the value of building a good credit history. As they get their first credit card bill and have to start paying their student loans, help them understand interest charges and how they work. You can even show them how to use this debt calculator so they can see how much interest they will pay over time and how increasing their payments can help eliminate a debt faster.
Helping your kids become more financially literate can also help you increase your own knowledge on reducing debt, improving your investments or saving towards an emergency fund. The Talk with our kids about money program has plenty of resources available to help you as a parent introduce the concept of money and debt to your kids.
