USA (Washington Insider Magazine) – Although financial literacy is critical to long-term economic well-being, it’s not a standard part of K-12 education in the United States. Only 26 states mandate personal finance courses for high school students, and California recently joined that group. California Governor Gavin Newsom stressed the importance of teaching children financial literacy at an early age, which they should acquire before entering the workforce.
Research supports the value of teaching financial literacy outside of the classroom. According to a 2020 study published in the Journal of Financial Counseling and Planning, college students who were taught financial basics by their parents felt better prepared to make financial decisions. This indicates that parental guidance can significantly impact financial competence.
Start Early with Budgeting Basics
According to Jennifer Seitz of Greenlight, budgeting should be introduced to kids as soon as they express an interest in money, which can happen as early as preschool. Children learn the worth and constraints of money when they are taught about opportunity costs and budgeting, which involves making decisions like saving for a future treat or deciding between instant gratification and saving money. It’s not too late for older teens to get started. Urge them to budget their money and make plans for future costs like concerts, vacations, or more schooling.
According to Businessinsider, Children learn financial habits by observing their parents. Seitz advises parents to model good financial practices and engage in open discussions about money. These conversations help children develop their financial understanding and habits.
Involve Kids in Real Financial Activities
Michael Broughton, CEO of Altro, recommends involving children directly in financial activities, such as investing. Opening a brokerage account in the child’s name allows him to trade stocks and manage his investments, giving him hands-on experience with money. Broughton tells how he sets up regular investments for his younger sister so that she learns about financial growth.
By implementing these strategies, parents can play a critical role in preparing their children for financial stability and success.
