According to recent studies, it’s estimated that only 53% of adults in the United States are financially literate. This means that just under half of the adult population in the country don’t know how to properly manage their money and don’t understand the systems and mechanisms available to them to help them achieve financial stability. It’s imperative that the next generation of Americans are more financially savvy than this generation, especially as the modern economic climate seems to worsen every day. The best way to do this is by teaching children about money at a young age. Lawmakers in Florida agree, and have recently approved a bill to make financial literacy a mandatory course for high school graduation in the state.
Identify Important Financial Values
Educating children about the importance of setting aside money for the future and saving but still allowing them to enjoy the fruits of their financial situation is a good way to teach them about the value of money. Children that exhibit the signs of an impulsive spender, for example, should be given a plan that outlines something they might want to buy, with incentives for saving long term instead of spending immediately. Teaching children these values at a young age will embed the idea of proper personal finance management, and this is a good way to start their journey to financial freedom.
Explain Financial Institutions and Mechanisms
It’s clear, from the statistics on financial literacy in America, that the average adult in the US does not know about the mechanisms and institutions available to them that could encourage them to become more financially stable. Teaching children about institutions such as banks, mechanisms such as loans, and loan providers will ensure that they will know who to call for help. A number of families in the US make use of Chase financing options for instance, which can greatly aid day to day spending. Understanding the mechanisms and institutions available will greatly benefit your financial situation and will teach children that they have options available to them for responsible lending purposes.
Create Earning Opportunities
According to investing and financial experts Ramsey Solutions, one of the best ways to teach children about the value of their time and money is to allow them to earn money for time spent doing specific things. This could be for chores or tasks around the home, or if they have a skill or talent that they can sell, they can do this. The idea is to equate time to money that can be earned, and to highlight how putting time in equals getting money out.
Giving them this level of control will be hugely beneficial to their financial minds as they will understand that wasting money just equates to wasting their own time. Doing this will also encourage them to learn about saving and investing and could break some of the habits of habitual spenders before they grow into a lifestyle.
It’s never been more important to teach the next generation about money. Being financially savvy can set children up for life and help them to build a better future.