Teach Your Child Financial Literacy

One of the questions that may be resting on your mind is, “At what age should a child begin learning financial literacy?” A school of thought is that you should wait until the child is mature enough to understand the concept of money and the value of working hard to earn money. This is one perspective, but the reality is that it’s never too early to begin teaching your child financial literacy. The strategies you use at each stage of your child’s life will be different and we’ve presented some possibilities in this article.

 

Toddlers (1 to 3 years old)

1. Read kid-friendly financial literacy books.

Storytime with your toddler isn’t restricted to reading fairy tales. Several kid-friendly books have been written to help children learn the importance of financial responsibility. Some possibilities include:

• “Bunny Money” by Rosemary Wells
• “Paddy’s Pay Day” by Alexandra Day
• “Tom and Annie Go Shopping” by Barry Smith
• “Lemonade in Winter: A Book About Two Kids Counting Money” by Emily Jenkins

 

2. Identify the various denominations of money and sort them.

It’s good to help your toddler identify the various denominations of currency in the same way that you teach him or her the colors or the letters of the alphabet. Allow your child to feel the money and practice identifying what each represents.

 

Preschool Children (4 to 5 years old)

1. Read kid-friendly financial literacy books.

Storytime will be a staple in your home until your child becomes a preteen. However, the level of the books you read will increase as your child ages. Some possibilities for your preschooler include:

• “Alexander, Who Used to Be Rich Last Sunday” by Judith Viorst
• “The Berenstain Bears’ Trouble With Money” by Stan and Jan Berenstain
• “How the Moonjar Was Made” by Eulalie Scandiuzzi
• “The Money We’ll Save” by Brock Cole

 

2. Get your child a Moonjar

The book “How the Moonjar Was Made” teaches children how to save, spend, and share money. However, what makes the book truly unique is its supporting website. You can start giving your 5-year-old child an allowance and buy a moon jar for him or her to store the savings from this allowance.  The moon jar provides a practical application of the financial literacy concepts taught in the book and is a great way to help your child develop good spending habits.

 

3. Teach the value of earning money.

Your child can start doing small chores around the house from as young as 4 years old. These chores should be linked to monetary rewards so that the child understands that money is earned through doing work.

 

Grade School (6 to 12 years)

1. Read kid-friendly financial literacy books.

Your child is now old enough to read financial literacy books on his or her own. Some possibilities include:

• “The Go-Around Dollar” by Barbara Johnston- Adams
• “A Chair for My Mother” by Vera B. Williams
• “Neale S. Godfrey’s Ultimate Kids’ Money Book” by Neale S. Godfrey
• “Pretty Penny Cleans Up” by Devon Kinch
• “Rock, Brock and the Savings Shock” by Shelia Bair
• “A Smart Girl’s Guide: Money” by Nancy Holyoke
• “Amelia Bedelia Means Business” by Herman Parish

 

2. Start teaching your child the value of entrepreneurship.

The world in which your child is growing up is quite different from the one in which you grew up. Entrepreneurship is highly valued and touted as the true way to gain financial freedom. Some people are born with a business-savvy mind while others must develop those skills. The fact remains, however, that entrepreneurial skills are important for financial literacy. One of the things you can do to help your child develop entrepreneurial skills is to enroll him or her in age-appropriate entrepreneurship camps and after-school activities. Young Entrepreneur Learning Labs is one option.

 

3. Open a bank account.

Your child is now old enough to open a bank account. The first step in the account opening process occurs long before you take your child to the bank. You must help your child do adequate research to find an interest-bearing savings account that yields the best returns. Additionally, you must teach your child the difference between a savings and investment account and the value of each.  Don’t just open a bank account randomly.

 

4. Use apps and online games.

Learning should be fun. Your child is glued to his or her mobile device for most of the hours in a day. Use this to your advantage by encouraging him or her to play one of the financial literacy games found here.

 

Teenagers (13 to 18 years)

1. Involve your child in financial decision-making.

You’ve spent the past 12 years of your child’s life building the foundation for financial literacy. It’s now time to help your child use this knowledge to make personal finance decisions. For instance, you can ask your child to help you make shopping lists to highlight the importance of buying only what’s necessary and not spending on frivolous things. One of the constant financial battles your child will face throughout life is prioritizing wants and needs. Your child must be able to distinguish between both and spend his or her money accordingly. This is an essential skill to develop as your child begins saving for the future.

 

2. Develop budgeting skills.

Help your child use budgeting apps to keep track of spending habits and money allocations. Visit this website to learn more about some of the best budgeting apps for your teen.

 

3. Add your teen as an authorized user on one of your credit cards.

Nothing beats first-hand experience. Help your child understand the benefits of having a credit card and how to manage one effectively to avoid getting into debt. Set a limit for your child that’s well below the actual limit of the credit card and hold your child accountable if he or she exceeds that limit. Financial literacy will help your child better navigate adulthood. You can begin developing these skills in a child who is as young as one year old. The trick is, however, to consistently hone these skills at each stage of your child’s development. Additionally, it’ll be more difficult for you to develop these skills in your child if you haven’t learned them yourself. You must, as a result, make a commitment to get your own financial life in order so that you can be a positive example for your child.