Posted on Apr 28, 2022
Did you know financial education has been linked to lower debt levels, greater savings, and higher credit scores as children mature into adulthood? Parents are the primary influence on a child’s future financial well-being because they have many occasions to communicate information, set powerful examples, and involve children in activities that teach them basic financial skills.
Below are five ways children learn about money with parents as their guide.
- Observation. One of the biggest ways children learn is by observing. As parents, chances are at least one of you go to work to provide for your family. Your children can see that a relationship exists between work and money. Have a conversation with your children about work and how your earnings influence your purchases, where you live, and how you manage your money.
- Family Financial Discussions. Another great way to teach your children about money is by including them when paying bills or making large purchases. Family financial discussions can be a way of teaching children about the financial choices you make and why you make them. Depending on the age of the children, try to put it in terms they understand. The main idea is to teach them the importance of budgets and the need to make choices with your money.
- Active Participation. Children learn about money by doing. By having your children actively participate in a trip to the grocery store, they can see how budgeting relates to shopping. Visit a local community bank with your child and open a savings account in his or her name. This provides opportunities to teach about saving money and the purpose of a bank. If your child operates a lemonade stand, walks dogs, or babysits, use these occasions to teach fundamentals about earning, spending, saving and donating money. Return to the bank regularly to deposit these funds into your child’s savings account.
- Reading Books. Children can learn about money by reading with you. There are many children’s books available on financial topics including earning, spending, saving, borrowing and donating. These books provide an easy and spontaneous opportunity for questions and answers. Visit your local library for suggestions, or you may be able to check out books online with your library card.
- Playtime. Children learn about money by playing, particularly if you are playing with them. Board games with play money are great fun and educational too. Online games provide an engaging way to teach about money and start smart money conversations.
Free financial education resources for teaching children.
The Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Trade Commission (FTC) and U.S. Mint provide different types of free financial education materials for pre-kindergarten through college students.
CFPB’s Money As You Grow program teaches children how to reach certain age-appropriate financial milestones. Additionally, the CFPB offers a list of children’s books that can help open conversations about money.
The FDIC’s Money Smart curriculum includes modules written for specific age groups. There is also the newly-launched How Money Smart Are You?, a suite of 14 self-paced games and related resources. Likewise, the Federal Trade Commission (FTC) offers free games like The Mall, which teaches children about advertising, business competition, privacy and scams.
In addition, the U.S. Mint has free games and activities for children. From math games to coin scavenger hunts, you can find all sorts of smart money conversation starters.
Ultimately, having open conversations about money with your children, shopping with them on a budget, reading to them about money, and playing money games will lay a solid foundation and positively impact their ability to better manage their own finances in the future.
This spring, we’re helping to promote Teach Children to Save, a national program sponsored by the ABA Foundation, to help young people develop good money saving and spending habits early in life. This year, the official Teach Children to Save Day is Thursday, April 28. Learn more about this program at ABA.com.