Financial Literacy for Kids

The time has arrived—your child is getting ready to graduate from high school and soon your nest will be empty. As a parent, you have many responsibilities to help prepare your young student for the challenges of college. Perhaps the biggest one is to teach them how to spend (or how not to spend) their money. A solid foundation of financial literacy for kids appropriately begins at home.

Few college students are completely independent. That means their support can place a heavy burden on their parents, a burden which can last a long time. Recent surveys indicate that as many as 70% of college graduates are likely to move back home with their parents after graduation.

But providing a good financial education for kids long before they head off to university can help relieve some of that burden. Young people can learn the repercussions of their financial decisions and begin developing positive money habits from an early age.

An unfortunate truth today is that college preparation courses presented in high school do not teach kids about money. College-bound youth need to learn how to resist the financial pressures of college life, allocate resources responsibly, and spend their limited funds in a mature, healthy manner. In the absence of adequate personal finance training in school, parents need to step in. One of the first things a parent can do is model good money habits themselves. Kids gain most of their money knowledge from you—so if you show them what mature spending looks like, they’re likely to pick up that habit.

To help you build financial literacy in your student and prepare him or her for the real world, some programs are currently available. Responsible parents can enroll their children in financial literacy programs—often called money camps—which impart positive money management skills.

Many such programs also make resources available complimentary on their websites. If the time for your child to go off to college is near, it’s time for you to step up and make sure he or she is prepared.

Financial Literacy for Kids – Talk for Families

Families all around the country are beginning to recognize the vital importance of teaching children how to effectively manage money. Indeed, a financial responsibility movement is sweeping the nation as people strive to cope with the recent economic slowdown. Yet in the realm of financial literacy kids may be at a disadvantage, especially if their parents did not receive personal finance training when they were young. Too many people in the U.S. still live paycheck to paycheck—a risky financial situation regardless of income level.

Giving kids financial education and teaching money management is one of the best ways to prepare them for real-world challenges. The National Financial Educators Council (NFEC) has designed a set of ten essential money talks parents should have with their children. The first of these talks focuses on goal-setting. Setting realistic goals and making a plan to achieve them builds a viable framework for effective money handling.

The goal-setting talk sets the stage for teaching financial literacy to kids. The NFEC suggests that parents first share some of the goals they had when they were young, both the serious ones and the ones that seem silly now. Then they suggest asking the child to share some of his or her goals. Does she want to be a dancer? Does he want to have children of his own someday? Parents should encourage their kids to have dreams, and let them dream big.

The next step in this talk is to set a family financial goal. For example, the goal might be to reduce a utility bill by half. Plan to set aside the money you save for a celebration, like going out for pizza or a weekend at the beach.