When and how should children learn about financial literacy? What things should you teach your homeschooled child to ensure they spend their money wisely?
When it comes to money, parents are children’s first teachers. Most parents have their own hangups about finances, though, and may have to work through some challenges of their own in order to teach with conviction. The good thing is you don’t need to be a financial guru to teach your children financial literacy. And it is important for parents to help their kids learn these lessons so they can avoid making poor financial decisions when they’re older. Children learn through observation and play. Interactive games are a great way to start teaching kids how to manage money, and you can start choosing those appropriate for your child’s age and skills.
What Kids Learn About Financial Literacy From Watching Their Parents
It’s more difficult today for children to understand money than in the past by observing their parents because plastic has replaced real money. Since there is very little cash being exchanged, the direct concept of trading dollars for goods is complicated.
When you do explain these magic plastic cards, start with debit rather than credit cards. Compare the bank with your child’s savings jar. Just as when they see their savings go down when they take money from their jar, your bank account balance is depleted with each withdrawal or purchase.
A good first explanation for a credit card is that it works like borrowing money from a friend. You borrow money so that you can make purchases, but it always must be paid back.
A weekly allowance is usually a child’s first hands-on experience with money and how it works. They will learn to make choices of whether to spend money on candy and toys, or to save it for future use.
Encourage your kids to set financial goals by having them create a wishlist of things they want to buy. Dedicate a savings jar just for those items, and use a different jar for spending money.
What Homeschooling Parents Should Know about Financial Literacy
Early money lessons dovetail with basic math curriculum for homeschooling parents. The same fundamentals are used: saving is addition; spending subtraction. You can throw in division too when appropriate (“how many cars can you buy with the money in your jar?”).
Like anything else, teach one lesson at a time, reinforcing concepts and revisiting the ideas covered often. Your children will build on previous and practical knowledge when learning about savings, spending, earning and other financial literacy topics.
From recognizing and counting coins to making a personal budget and starting a savings account, learning about money takes time. Parents should be careful not to frame money lessons in negative or scary terms, whatever their own relationship with finances has been. While the skills required in financial management are easy enough to learn, it’s the application of those skills and the fundamental attitude towards money that makes all the difference in the long run.
AUTHOR BIO: Caylin White is a freelance writer who loves to watch money grow. She writes about investing at Stock Hax.