The financial turmoil over the past five years—high unemployment, foreclosures, personal and national debt and the associated uncertainty—has led to increased interest in financial literacy. Interest is not just from the adults who were caught in the downward spiral that has become known as The Great Recession, but from those who understand the importance of educating the generations which follow.
Teaching financial literacy in the traditional K-12 setting (in the rare cases it existed) has gone the way of home economics and industrial arts, leaving parents with the responsibility of teaching their children the skills of budgeting, saving, debt management, and investing. Beginning conversations early, engaging your children in the process, and providing opportunities for them to practice what they have learned increase the odds you will raise fiscally responsible young adults.
Here are some ideas worth considering:
- Be thoughtful about spending
Talk with your children about how you make spending choices. Let them know not all decisions are made based on your ability to afford the purchase. Use language like “I’m choosing to spend our money in a different way because…”.
- Be transparent
It’s tempting to keep money discussion in the adult realm either because you don’t want the distraction of children or you want to shield them. It’s not necessary to let it all hang out, but an easy way to engage is to include them in the monthly bill paying. Talk about due dates and the price associated with late or partial payments.
- Budgets begin early
If your child receives an allowance, help them allocate the money to serve their short-term needs and long-term desires. Designate a portion of the money to be used for their immediate needs, but work with them to set goals for savings and charity. Monitor the progress, and celebrate the achievements.
- Model the behavior you want to see
To raise financially literate children, we must make the effort ourselves. Start by creating a budget and try to live within it. Pay yourself first each month by allocating money to savings. If you are uncertain of your own abilities, find trusted advisors who will educate and support you in the process. The best way to teach your children is to lead by example.
We think you will be interested in these two June events and invite you to join us for
one or both:
6/19/13 – Webinar
Preparing for Tomorrow’s Transitions Today
6/25/13 – Santa Rosa Seminar
The Women’s Roundtable: Milestones – Planning for Life Events