Research says parents who shy away from discussing money and don’t teach sound principles may rob their children of future prosperity. It’s easier to learn and adopt good habits when you’re young. There’s a lot at stake: A survey by Quicken says reaching an income of at least $75,000 is challenging for adults who didn’t learn about money as children. And one-third of adults Quicken surveyed said they were not taught about money young. Those same adults are twice as likely not to talk about money to their children before 18, perhaps for lack of confidence.
At older ages, it’s harder to plant a prosperity mindset and adopt habits to back it up. LeBaron’s research echoes that. “Research has shown that the earlier children start forming attitudes, values and habits, the better off for them. ... Parent-child financial interactions really do impact them throughout their whole life, though I don’t want to say it’s ever too late to learn,” she said. Why not teach Since research confirms how vital it is to teach kids early about money and says parents are the most influential source of financial learning, why do so many avoid the topic? LeBaron thinks some parents — especially those stressed financially — don’t talk about money because they don’t want to burden children with worries. They think they’re shielding them, but instead hurt them because the children don’t learn enough about money to use it well. On the other hand, parents who teach their kids principles and practices influence their children’s financial capability and independence. Their kids will have lower debt in emerging adulthood, more savings and better credit scores. They will be less likely to fall behind on loans including mortgages and will have higher net worth as adults. Good money management may even contribute to higher self-esteem, and better physical and psychological well-being, the study said. The researchers found millennials are anxious to talk to their existing and hoped-for children about family finances, as well as about creating opportunities to learn financial responsibility by letting them handle money, the value of hard work and how to save. Never too young When kids are very young, in early grade school, parents should introduce basic savings and investing principles, explaining concepts in simple, understandable ways, said Dennis Pellegrini, a financial advisor at Peak Brokerage Services in Wyomissing, Pennsylvania. “The earlier someone starts, the better,” he said. “That’s real simple math.’ When parents teach kids about $ By middle school and beyond, children should know that it’s better not to touch what they’ve saved. They should let it grow so they can buy something that’s important to them. “The key here is children understanding what the goal is — and the goal is to grow your assets,” said Pellegrini. Just as adults should have an emergency fund, children need a separate account for short-term wants, like that great pair of sneakers. They can fund that and keep long-term funds safe, said Pellegrini. The big challenge for older teens and college-age kids — a time when lenders and credit card companies are circling with enticing offers — is to avoid debt. Having the other principles in place when a child is young helps that greatly, said Pellegrini. Report adThe best lessons target what a child responds to, he said. “Find out what their ‘why’ is. Not yours. Understand what makes them tick and appeal to that.” A 2018 study by BYU researchers published in the Journal of Family and Economic Issues asked millennials, their parents and grandparents what they wish they’d been taught by their parents and what the parents and grandparents regretted about the way they passed financial wisdom to the millennials. Most of the “I wish” responses were about sharing practical knowledge, the importance of financial stewardship and having open communication. Sometimes parents don’t know sound money principles themselves and don’t feel they can teach their children. Pellegrini said they should swallow their pride and get some coaching, for their own and for the children’s sake. Where to begin Loren Marks, a professor in the School of Family Life at BYU, has a starting point for teaching kids about money. He says wise money management begins with being grateful for what you have and knowing the difference between needs and wants. Money management should reflect a person’s values, as well, said LeBaron, but often doesn't. She said families should ask themselves what they care about when making money decisions and include it in the budget. For instance, if the parents’ relationship is important, budget for a couple getaway, a date night. Often, families don’t even have a budget. Sarah Anderson poses for photos with Monopoly money in Herriman, Utah, on Wednesday, Oct. 9, 2019. When kids are young, experts say parents should introduce basic savings and investing principles, explaining concepts in simple, understandable ways. Scott G Winterton, Deseret NewsE. Jeffrey Hill has 12 children and said the single best practice his family used to teach wise money management was the concept of a family bank, which he picked up from experts decades ago. He and his wife were directors of the bank, which recently phased out when their youngest turned 18, said Hill, associate professor in the BYU School of Family Life. The children deposited money when they wanted and earned 10% interest a month, compounded monthly. They could borrow money, but the family bank charged 10% interest per month, compounded monthly. Every month, the bank directors reviewed with each child their balance, deposits and interest earned or paid. Hill said all but one of his children figured out that smart folks earn interest, instead of paying interest. The lesson was so successful they had to cap each family bank balance at $100 so the parents/bankers didn’t go broke. When a child reached $100, the money was deposited elsewhere. One child, though, got so deep in debt they almost repossessed his cellphone before he caught on, Hill said. “He learned a valuable lesson.” Gregg Murset, certified financial planner and founder of BusyKid, of Scottsdale, Arizona, taught his kids about money starting very early. The father of six said one son saved $10,000 by the time he left home at 21. Murset uses everyday moments to teach. He knows kids pay more attention if they have to pay for something themselves, so he encourages them to buy dinner out, which definitely boosts awareness of how each item raises the bill. His kids learn to calculate tips, too. In the grocery store, he might point out how much junk food costs and how little it rewards a person. Or explain the difference between credit and debit cards, which look the same. A visit to the gas pump is a chance to discuss the cost of running a car, including the car itself, gas, tires, registration, insurance and oil changes, among other things. Values matter in teaching about money. Murset said to teach work ethic and money smarts because the correlation between those two things and prosperity are clear. “If you teach those two primary things, you are setting them up for future success,” he said. He has known a lot of parents who never taught their kids money concepts, either for lack of time or knowledge. That led him to create BusyKid, a chore and allowance platform. Parents subscribe, then children are given access to a real FDIC-insured account that lets them manage through the app how their allowance and payment for chores is used, with parental oversight. Children can even invest in shares of stock through BusyKid’s partnership with Stockpile. Parents who don’t know where to start teaching their kids about money or who need some help with basics themselves will find a number of resources online.
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Kimberly Yee oversees a $40 billion state budget, manages $16 billion in assets and makes disbursements to state agencies, local governments and schools. She is also a mom with two young sons, and she has long been concerned that kids today are not learning the financial skills they need to ultimately be successful. Experts say that paying a small amount, however infrequently, can help in providing financial education to kids.
Yee was one of many supporters behind legislation to make financial education mandatory in Arizona high schools. High school students now must learn to balance a checkbook, understand the consequences of credit card debt and more. “Financial education empowers young people to achieve financial freedom so they can attain their personal and professional goals,” Yee explains. “With [financial] freedom, our young people can achieve anything.” Yee answered our questions about making financial literacy a priority. Her responses have been edited for length and clarity. Why are you so concerned about today’s kids being financially literate? Financial education is so important as a basic life skill. If we teach children at a young age about smart money practices, they will be responsible with their money as adults. I have made financial literacy a cornerstone of my administration, because the fiscal health of our state depends on it. It is important to recognize that student loan debt in our country stands at $1.6 trillion dollars, up from $1.5 trillion last year. A record 7 million Americans are three months behind in car payments. Nearly 40 percent of millennial women [ages 18-34] say they don’t pay their bills on time, and they are twice as likely as their male counterparts to take out a high-interest loan to cover a $2,000 emergency. What first made you realize kids are not prepared? Twelve years ago, when I worked as a staff member in former Arizona State Treasurer Dean Martin’s administration, I visited students at [an Arizona] university during their orientation week. I saw the credit card companies lined up to help those students open their first credit card accounts. I asked the students at that orientation whether they’d applied for their first credit card, and most of them raised their hands. When I asked whether any of them had ever taken a personal finance course, sadly, none of the students raised their hands. That’s when my passion to improve financial education began. Arizona’s State Treasurer, Kimberly Yee reads “Curious George Saves His Pennies” to a group at the Tempe Boys and Girls Club. How can parents start teaching kids about money and saving? Parents can teach their children the importance of earning money by compensating them when they do chores around the house. When children learn that it takes work to earn money, they can appreciate the value of money and be mindful of how they use it. For older children who are learning how to spend money, it is helpful to use the envelope system that allows them to categorize the funds. One envelope can be for giving, another for saving and a third for spending. As children see the money being spent, it encourages them to keep doing chores to earn more money or to start slowing down their spending. I also encourage parents to start personal savings accounts when their children are born and to consider a 529 college savings plan so they can begin early on to grow their money with interest. What did you do with your own kids to teach them to be financially literate? My children earn their money by doing household chores, and they put aside money to save and to spend. I teach simple concepts like the fact that saving money for a longer period of time will buy a bigger toy, so we’ll circle a picture in a toy catalog and work toward buying that toy over time. For little purchases, we’ll go to the dollar store so they can understand that each dollar means one toy, and they can count their purchases with each dollar. I have also taught them about giving to others and I show them pictures to provide examples of how their money can be used to help people. Do you think kids should have access to savings/checking accounts or credit cards before college? Yes. I encourage parents to start savings accounts for their children early on. When their kids are in junior high and high school, they should establish joint checking accounts so children learn how to deposit and withdraw money with parental supervision. This is a perfect time to begin teaching older children how to balance a checkbook. How important is balancing a checkbook in this age of online banking and smartphone apps? The practice of balancing a checkbook and creating a simple budget is a skill needed now more than ever. It is important to keep track of how your money is going in and out. An while it is easy to rely on electronic apps and online banking programs, if there is a mistake, it might go unnoticed. When does legislation go into effect requiring that kids learn financial literacy? In the first weeks of my new administration, I put forward legislation that requires high school students to have a course on personal financial management during their economics semester. For many years, Arizona students were not required to have any kind of financial education before graduation. Schools offered these classes as electives, so we missed a lot of students who didn’t know the first thing about managing their money. S.B. 1184 went into effect in August and this is the first school year when financial education must be included. Students will be equipped to manage their money and be ready to survive in the real world. What other specific financial skills do you think kids need to learn before college? Parents can engage their children in simple things to learn about saving money. For instance, show children what your household utility bill looks like month to month. Make it a family goal to decrease utility usage with the goal of getting a smaller bill in the mail the next month. You’ll soon see children start turning off the lights in empty rooms and helping as a family unit to save a little money. A nice incentive for the children is to buy them a little treat with the money that is saved from the lower utility bill. Kids start learning about money a lot earlier than we may think. They see us pay for groceries. They open birthday cards from grandma with a $10 bill inside. They hear us talk about our mortgage. Money lessons are everywhere. To help our kids feel confident with money, we can tune into these everyday opportunities to teach them how to use money as a tool to support their well-being. Financial education for kids simply means the possession of knowledge or skill that allows your children to make informed and effective decisions about their financial resources.
Teaching Kids About Money in Early Childhood (3–6) Key lessons: The value of money, developing a relationship with money, delayed gratification, and the importance of sharing and saving At this age, lessons should be about demystifying money. Help your kids understand where money comes from by focusing on what's tangible. "With children six-years-old and younger, money is very abstract," says Laura Dierke, Director of Member Engagement and financial education programs with Thrivent. "At age four or five, when your kids are getting gift cards for Christmas and checks and cash from grandma, show them what that means digitally, but also show them tangibly with dollars and cents." According to research by the University of Cambridge, children ages 5 and 6 begin to understand the value of goods and services. Explain the cost of certain toys and activities and begin connecting how work helps to pay for those things. Introduce them to the retail experience. "In the last decade, kids rarely see evidence of money passing anymore. Find ways to involve your kids in commerce so they can experience it," says Dierke. When kids are engaged in the shopping experience, money becomes a more tangible concept for them. Review itemized receipts from grocery stores to help them equate prices with their favorite foods or let them hand money to the cashier. "Even with online shopping, let them go through the retail experience with you. Have them put it in the cart and go through the process," adds Dierke. Teach them about sharing, saving and spending. By the age of 5 or 6, you can also give your child a small allowance so they can learn how to share, save, and spend responsibly. "At Thrivent, we talk about sharing first because we value sharing and giving back with our money first," says Dierke. "Ask your kids: how much do you want to give back? How much do you want to save and spend?" Encourage them to dream about the future. "There isn't a lot a child needs to buy before five years old," says Dierke. "Instead, show them how they're savings is growing and talk about how they can use their savings in the future. That's fun stuff for them. They love knowing that." Let them experience giving back. "There's lots of different ways to be generous, and the easiest for me is to write a check or donate online. But my kids are completely unaware of it," says Dierke. Now that it's easier to donate online, giving back has become much simpler, and more private – meaning our acts of generosity may be hidden from our kids. "I strongly believe that giving back needs to be experienced, not just taught," notes Dierke. "I recommend taking the money to the donation center so your kids can see how they're money can make a difference." Money Lessons for Late Childhood (7–12) Key lessons: Wants vs needs, earned allowance, savings and responsible shopping Once your kids start earning an allowance, you can teach the cause and effect relationships with money and involve them in household financial decisions, like planning a weekend away, grocery shopping, or creating a holiday shopping budget. "We love to travel in this house. Everyone knows that if we're saving, it's because we're getting ready for a big trip," says Dierke. "My kids also know my husband and I want to retire someday. They know that we save for their college education. And we talk about those things because those are family goals and values." Explain the difference between wants and needs. Once kids understand the basics of commerce, you can deepen the conversation to explain wants versus needs. Do you need the fanciest bicycle, or will a simple one work just fine? If your child has their eye on a big "want" purchase, help them think through whether they can budget for it, and if it's worth saving for. And as you consider wants versus needs, you may find that what you value is different than what your kids value. "While I'm never, ever going to think that the Animal Jam game app is a good use of five dollars, it obviously means the world to my seven-year-old and I needed to find a place to be at her level and understand its value to her," says Dierke. Give them more responsibility with money. Once your kids understand how cash and commerce work, introduce money in digital form and give them more responsibility over their earnings. "In my family, we just started testing a couple of digital solutions," says Dierke. "My kids are using Greenlight right now. And, my family totally recommends it." Greenlight is a debit card for kids that allows them to manage their money, while parents monitor the account. Talk to your kids about the impacts of advertising. As adults, we're aware of the powerful influences advertising can have on our purchasing decisions. Many of us learned that lesson the hard way. Kids consume advertising every day, and research has found there was a direct tie between how much TV a child watches and how many items they ask for at the grocery store. Talk to your kids about how advertising influences our understanding of wants and needs. Get curious about the ads that excite them and encourage them to think about why they want certain foods or toys they say on TV. Talking to Your Teens About Money (13–17) Key lessons: Financial values, investing and compound interest, job searching With teenagers, financial conversations can become more nuanced, more circumstantial, and more personal. "My daughter is fourteen, and her favorite question right now is: 'So how much do you make, Mom?' You need to be ready to answer that question," Dierke laughs. Teens are more curious and ask questions you, as a parent, may not have even asked yourself yet. "Learning about finances is a lifelong process," she adds. Teens remind us of that. Engage in regular and open conversations about earning money through work, the concepts of debt and credit, and the importance of sticking to a budget. Have an honest conversation about credit. It's a natural part of growing up – teens want more freedom and more money to act on that freedom, which makes them great targets for retail credit cards and other loyalty programs with fine print. Teach your teens about credit, credit scores and borrowing money responsibly. "When I first went to college, I signed up for a J.Crew credit card. I loved the freedom of being able to buy my own clothes, but then found out about 22% interest rates. I think I spent my entire freshman year paying for those three or four things from J.Crew catalogue," Dierke recalls. Encourage teens to earn money beyond allowance. While your 13-year-old may not be able to get a job at the local coffee shop, there's plenty of opportunities to learn the value of working and saving toward their goals. From babysitting and walking dogs to tutoring peers and washing cars, there are several ways to work in the community. You can also introduce your teen to investing through custodial accounts, which allow teens to invest through an account owned by the parent. Custodial accounts allow parents to "gift" up to $15,000 that the teen can then invest. As the parent, you make the trades, but you can make the investment decisions with your teen. Help them create a budget. Talk to your teens about the importance of creating and sticking to a budget to reach their goals. Start by asking them about their dreams for the future. Do they want more freedom? Maybe they can save for their first car. "My daughter has a Greenlight account that's set to put a portion of her earnings and change from her purchases aside so she can buy a car someday," says Dierke. Research carried out by The Money Charity in 2016 revealed that 90% of schools were delivering financial education. While uptake figures are pleasing, the quality of the education delivered tells a different story.
Rather worryingly, 66% of teachers who responded believed the financial education delivered was either somewhat or very ineffective. In fact, three out of five teachers said the curriculum change had no impact, while one in three didn’t know financial education was on the curriculum. There are several factors which are responsible for this poor outlook on the financial education, ranging from its position within the wider curriculum, to a lack of in-depth training for teachers. So, is the lack of financial education and responsibility having a major impact? Research from The Money Advice Service has found that 12-17-year-old children whose parents made their spending decisions for them were more likely to spend unnecessarily and have poorer money management skills. It’s clear that young people require strong financial education as well as hands-on experience of managing their money, and this responsibility lies with both their parents and teachers. Eighty per cent of parents believe it is their responsibility to teach their children about finances — yet one in six don’t feel confident doing so. To help, pensions specialist and investment expert, True Potential Investor, has provided a range of tips to help you teach your children about finances and how to be responsible with their money. Start their financial education at a young age The Money Advice Service identifies that your child’s attitude towards money can be determined by their seventh birthday. It’s important that you start talking to them about money and what it means early. – Ask your child to help you count your cash to pay for something. Doing so can help them not only get used to handling and counting money, but also improve their numeracy skills. – Allow your child to pay the cashier to educate them about the exchange transaction. – Teach them through play. Many children will like to play shop, which will again help them better understand money and value while still remaining fun. Underline the difference between essential and non-essential spending Of course, there is a difference between what your child would like and what is a necessity. In many cases, children simply don’t understand the cost of what they are asking for. – If your child asks you for a new toy or item of outfit, don’t be afraid to say no. Encouraging your child to save up for something they want rather than you buying it for them will help your child understand the value of money and delayed gratification. – Explain the cost of what they’re asking for in real-life terms if they’re older. For example, is a £300 games console enough to cover the family’s monthly food shop? This perspective can help children realise the difference between what they want and what they need, and realise that they can’t always have everything. Help them to set goals and work towards them As stated above, it’s possible to influence your child’s attitude to saving as well as spending. If they start saving towards a games console or other item, encourage them to budget with the money they have. This is applicable whatever the age of your child, whether they’re dealing with pocket money or wages from their first job. – Encourage your child to split their money between spending, saving and donating. By giving them three jars or piggy banks, they will be able to see a clear divide in their money. For older children, this can be done through having a separate current account to their savings account, while you may want to give younger children their pocket money in lower denominations so it can be easily split. Teach teenagers what they’ll need in future The transition between attending school and becoming more financially responsibly as they move onto college and university can be difficult for teens. As a parent, you’ll need to prepare them the best way you can: – Take a step back and allow them to make their own mistakes. As they join the working world and start earning money for themselves, they may be tempted to splurge with their first wage, leaving them short for the rest of the week or month. You can disagree with their purchases, but try not to be too controlling over how they spend their cash. Eventually, when they’re tired of being skint for the majority of the month, they’ll realise the importance of budgeting and will consider a purchase more before buying it. – Earning on their own is one of the best ways to understand the value of money, so encourage your child to keep working. – If your child is leaving to attend university, make sure they are aware how to remain financially responsible. When the student budget is limited, it’s very easy to turn to credit cards with a high APR. Make sure they understand the options available to them as a student and encourage them to choose the best ones. Studies show that parents—not the media and not peers—carry the most weight when it comes to teaching kids about money. In a recent study of millennials by Bank of America and USA Today, 58% of those interviewed cited their parents' advice or example as most influential in how they handle their own finances. Just like riding a bike or learning to play an instrument, learning to manage money takes practice. A study published last November by the University of Arizona, found 18-30 year-olds who received hands-on experience with money as children learned how to work hard, how to manage money, and how to spend it wisely as adults.
In Denver, Safeway has partnered with Young Americans Center to provide financial education for kids. At Young Americans Center, youth of all ages practice financial concepts like writing a check, using a debit card, selling a product, and working as a member of a business team in programs like Young AmeriTowne. By participating in Young AmeriTowne, fourth and fifth graders learn about economics, civics, personal finance and workforce readiness. They open a savings and checking account at the AmeriTowne Bank, complete a resume and interview for a job, as well as meet in business teams to create an advertising strategy and set prices of their shop. The program's culminating experience is a day running AmeriTowne, a real town that includes a Towne Hall, Medical Center, and Newspaper. Students running Young AmeriTowne in Lakewood have the opportunity to work at the new Safeway Market. A ribbon-cutting event for this new space will take place at 10:30am on Wednesday, March 27, when students from McGraw Elementary run the Towne. This celebration is free open to the public. For Todd Broderick, President of Safeway's Denver Division, this support enables Safeway to demonstrate their commitment to the Lakewood community. "I grew up working at my neighborhood Safeway store in Everett, Washington, gaining hands-on experience in money, customer service, and accountability from a young age. We want to provide this same experience to the youth who participate in Young AmeriTowne, and we are so proud to be involved," said Broderick. As parents wave their children off to school this week it would seem many are hoping it’s not just maths and literacy their kids will be mastering. A study has revealed more than half of parents are keen for their children to learn to become more financially responsible with many hoping their sons and daughters will become more self-sufficient with their cash.
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AuthorHi! I am Tim Connolly and I am providing help to parents to bring up their children in a healthy environment. I am working in this profession from last 5 years, if you have any query regarding this please contact me. Archives
June 2021
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