3 ways to help ensure their future success
According to a recent study, only 40% of all students between the ages of 7 and 17 receive money management training in school, and only one in five children are actively engaged in money management discussions with their parents. A survey by Money Advice Services found that less than half of students approaching high school graduation were confident in their money management skills and two-thirds of students have never actively deposited money into a bank account. The survey also found that only two in every five students knew how to shop around and actively save on purchases.
These recent studies paint a dismal picture of money management for young adults and point to a failure by both the educational system and the family unit to properly prepare children for adulthood. Poor money management skills, or a lack of knowledge, can lead to significant struggles in adulthood and can cause poor money management habits. Thankfully, there is a way to combat this issue, and it all starts with properly teaching kids about money from an early age.
Preschoolers
It is never too early to start teaching kids about money and diligent spending. According to experts, even preschoolers can begin learning about money as long as it is done in an age appropriate way. Clipping coupons, and having your preschooler help you find products in the store is a great way to teach them about the value of saving and to help build a practical skill. This type of activity also opens the door to financial discussions and can help your child understand the value of individual items. The lessons at this age will be short, but they will build a foundation for financial responsibility.
School-aged Kids
During elementary and middle school, you can help your child understand money better, by offering to pay them for tasks. Instead of offering a simple allowance for existing, you can pay them per task that is completed. Experts warn, however, that paying children for jobs they should be expected to complete as part of the family unit can be troublesome. For example, a child should not be paid for cleaning their bedroom, but you can offer compensation for yard work, vacuuming common areas, or doing the dishes.
Once your child starts amassing money for tasks, it is important to discuss needs versus wants, and the exchange of money for goods. Allow your child to pay for their items at a store, by actually handing the money to a cashier in return for goods, and discuss how buying one item means they do not have enough money for additional items.
Teenagers
Teens can handle a bank account, and should be set up with one as soon as they begin working, or before if you are willing to fund an account with a set amount of money each month. Your teen has autonomy in what they buy and how they spend their money at this point, and utilizing a checking account to handle their expenses is a good way to help them gain practical experience.
This is also an age when they should learn about paying bills. If you have a teen driver with a job, ensure they pay their portion of the car insurance. They can set up a bill pay to your account each month for the cost of the insurance.
In order for your child to become fiscally responsible as an adult, it is important to start teaching kids about money from a young age and offer practical lessons in money management.
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