Teaching Your Kids About Money

photo: d i a n a*

Up until a couple of years ago, being financially literate was a skill needed for “later in life.” Nowadays, things have drastically changed. The number of financial literacy classes is multiplying and money management classes are taught to students as early as grammar school.

“It’s never too early to learn about money” seems to be the consensus. An early start to understanding how to manage your assets means an early start towards a financially successful life.

Mint recently conducted an online survey aimed at better understanding what users’ approach was to money as kids and how they are teaching their own children. Nearly half of the survey respondents stated that they earned money before or in elementary school. Mowing lawns and babysitting were the most frequently held jobs and almost nine in 10 respondents had paying jobs in high school. High school jobs were mainly in retail stores, baby-sitting, restaurants and, again, mowing lawns. The survey indicated that earnings in high school were mostly used for entertainment, eating out or car related expenses. 

Most importantly, however, the majority of survey respondents said they were not very prepared to manage money after high school.

Despite that fact, most users indicated that they were responsible for paying their way through college: a large majority contributed 50% or more towards college expenses.

Less than half of users said that they felt they were very prepared to manage money or to save after college, and one in three users ran into early credit card problems.

That is probably what is encouraging more open conversations about money in these families now. Over half of users with children between the ages of four and 18 indicated that they talk a lot about the value of money, living within their means, saving to buy toys and helping those who are less fortunate. Yet, the majority of users said they felt schools do a better job teaching about anti-drug programs than about financial responsibility.   

Realizing that children need to become educated about money, more schools are implementing programs of study through the school curriculum and after-school programs.

Also, many organizations are developing online games that focus on money management. Online games have become one of the best ways to get kids interested in managing their money. The Great Piggy Bank Adventure, offered by the investment firm T. Rowe Price and Disney, is an online virtual board game that introduces kids ages eight to 14 to financial concepts and topics such as saving and spending wisely and how to use different investment strategies for growing assets. The game also teaches kids how to achieve goals. There is also a theme park dedicated to helping kids and families learn about financial planning. T. Rowe Price sponsors the Great Piggy Bank Adventure at Innoventions at Walt Disney World® Resort’s Epcot theme park. It combines physical and virtual elements to create engaging learning challenges for families. 
 
The United States government has also taken a stance on financial literacy. In 2002, the Treasury established the Office of Financial Education in an effort to promote access to tools that help Americans make educated choices in personal finance topics such as saving, credit management, home ownership and retirement planning. Among the programs initiated by the Department is the National Financial Capability Challenge, a non-monetary award designed to increase the financial knowledge and capability of high-school aged youth across the United States. The idea behind this program is to teach children how to take control of their financial future as part of a school’s curriculum. Within the program, students learn about personal finance topics and take a voluntary online exam to demonstrate what they’ve learned. The top scoring students receive awards and the outstanding schools and educators are recognized. To learn more about the program, visit the National Financial Capability Challenge website.

The Washington Department of Financial Institutions also has a list of games that help teach kids about money, from a variety of sources including the North American Securities Administrators Association (NASAA), the U.S. Mint, the Department of Treasury, the Federal Reserve Bank and the National Council of Economic Education.

If you want your children to grow up to be financially responsible adults, the key is to start their education early on and make learning a fun, engaging activity. Their school, after-school programs and online games can help you do that, but ultimately, nothing is more important than making open money conversations a regular part of their upbringing.