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Family Events...
Financial literacy
begins at home
By Marybeth Hicks
“Mom, I need new running shoes.”
“Mom, can I have $9 for the field trip next week?”
“The AP Bio exam is $85. Should I get your checkbook?”
“Mom, there’s no food.”
Sigh. If you’re like me, the joy of parenting is tinged only by the
relentless, unimaginable, skyrocketing expense of raising children in
today’s economy. From keeping up with growing feet and gangly limbs to
restocking the pantry, it seems not a day goes by without spending
money.
Recently, the spike in gas prices has been especially hard on families
with school-age children. When your life revolves around carpooling and
getting your kids from event to event, the current sticker shock at the
gas station is nothing short of brutal.
Since I can’t do much about the cost of gasoline, I’m using the
eye-popping prices to fuel some teachable moments about money. My kids
make it a point to notice gas prices and help us decide where and when
to “top off” by buying gas as cheaply as possible.
It’s crucial that our kids learn to be money-wise, but interestingly,
most American children are financially illiterate. Economics and
finance aren’t required courses in more than half of our states, and
too many parents allow their kids to live in a bubble of privilege and
irresponsibility when it comes to money. This isn’t true only of
wealthier families — kids of all economic backgrounds are largely
unschooled in issues of personal finance.
Lessons about money begin with your values
Teaching our children about money means instilling our values and
promoting their good character with respect to earning, saving,
spending and giving. Financial literacy is more than simply knowing the
benefits of compound interest, learning to create a budget and giving
kids a sense of financial independence.
Money will be a central issue for their entire lives, so it’s crucial
that we teach them from a young age how to keep issues of money in the
proper perspective.
Financial experts say that teaching about personal finances — as with
everything else we parents must teach — is best done by example. Our
kids need to see us weigh the pros and cons of important purchases.
They need to understand that we plan our spending to fit into the
family budget, and that a decision to spend money by going out to eat
or to the movies will mean less money is available for other things.
In a world where the concept of money is more and more abstract, thanks
to debit cards and electronic fund transfers, our kids often think
there’s an endless supply of it inside the ATM machine! Our job is to
share with them, within reason, the financial realities that dictate
our decision-making and help them adopt sound values about money and
materialism.
Everyday financial lessons
Here are five easy ways to promote kids’ understanding of money:
1. Get children involved in the weekly grocery shopping. Show them how
to compare prices and look for bargains.
2. Use a simple allowance system to teach children how to save for
things they want to buy. Some families use a point system for chores.
At the end of the week, points are traded in for cash — the value of
the points typically depends on the ages of your children.
3. Open a savings account for your children and give them opportunities
to add to it often. Create a policy about saving at least some of the
money they receive for birthdays and special events. Set aside regular
“bank days” so children are motivated to save up for trips to the bank.
4. Share with older children and teens enough information about
household finances so that they understand the issues and concerns
you’re facing. While parents shouldn’t burden children with the
stresses of adult financial matters (that’s what adults are for!), we
should be open enough so that our children can participate in our
efforts at saving and spending frugally. When kids know that you’re
saving for a vacation or working extra hours to pay down credit card
debt, they’re more sensitive about asking for things you may not be
able to afford.
5. Stress the value of gratitude. Children should learn to appreciate
that your hard work provides for their necessities as well as the
extras that make life comfortable and fun. Be sure to prompt them to
thank you for EVERYTHING — even things like school supplies and fast
food meals. Gratitude is the foundation for charity.
Learning to be financially savvy begins in childhood. The skills and
habits we teach our children now will guide them for their entire
lives. Especially in the economic times facing their generation, our
kids need our best efforts to make them financially literate.
Thanks for reading and sharing Family Events!
Take good care until next week,
Marybeth
Question of the Week:
Let’s generate suggestions to help parents teach solid habits for
personal finance. What works in your home? How do you pass on your
values about money and materialism? What do you do to help your
children save and spend wisely? Post answers on our Family Events
Facebook Page.
To see responses to last week’s question and respond to this week’s
question, read Family Events
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