Money management is an essential life skill many young adults lack. Get tips for teaching your kids about money & other financial issues at any age.
As parents and grandparents, we spend countless hours teaching our children about good manners, stranger danger, and the value of hard work. All of which will help them survive in the real world. But there’s another skill we should be focusing on: money management. According to a 2015 evaluation conducted by the Program for International Student Assessment (PISA), approximately one out of five 15-year-olds in the U.S. doesn’t meet the baseline for financial literacy, meaning they lack a basic understanding of bank accounts, credit and debit cards, and loans. Only 10% understand complex financial issues such as taxes.
Although discouraging, these numbers aren’t surprising. Money is one of those taboo topics that adults don’t like to talk about so it doesn’t come up in conversations with our children. However, we have to put our discomfort aside for the sake of our loved ones and take the lead in helping them become financially savvy. Having a strong foundation that’s based on setting goals, saving money, and avoiding debt may set your children up for success throughout their lives. As they transition into adulthood, most of their major life decisions will involve money, whether it’s managing taxes, taking out a mortgage, starting a business, saving for retirement and higher education, or estate planning. Plus, we might not be able to rely on schools to do it for us. According to the Council for Economic Education, only 17 states currently require students to take a personal finance class and only slightly more (22) require an economics class.
I want my daughters–and all children–to feel empowered and confident enough to take control of their financial and professional futures. That’s why I’m sharing some of my favorite tips to help kids become money smart. The key is to show not tell; age-appropriate, hands-on activities are generally more effective than lectures.
The toddler years are a good time to start laying the foundation and introducing basic concepts. At this age, children are like sponges, absorbing everything that’s going on around them, and they love to act “grown-up.” You may want to consider:
By the time they enter kindergarten, most kids understand you need money to buy things, but they may not fully grasp where it comes from or the importance of saving. The goal at this stage is to teach children that, except for birthdays and other special occasions, no one is just going to give them money; they have to earn it. And sometimes they’ll have to wait to get what they want, such as a new toy or video game.
The teen years may be the most challenging time to talk about personal finance with your children. The issues are more complex, and their friends’ advice tends to carry more weight than yours. But it’s important to keep the conversation going as they’ll soon have to handle these issues on their own. You might consider:
As noted by Rock the Street, Wall Street, an organization dedicated to providing financial education to girls, “There is a financial illiteracy epidemic in the U.S. Student loans and credit card balances are the highest they have ever been and workers are putting less and less away in their retirement accounts than ever before.”
It’s up to us moms (and dads) to help turn this situation around by setting a good example for our kids and teaching them how to be financially responsible. The money habits they form now under our guidance are the ones they’ll likely take with them into adulthood. And remember, it’s never too late to get your children on the path toward financial well-being.
I hope you find these tips helpful.
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
All investing involves risk, including loss of principal.
TD Ameritrade, the Program for International Student Assessment, and the Council for Economic Education are separate and unaffiliated firms,that are not responsible for each other’s services or policies.
paperMoney® Trading: This software application is for educational purposes only. Successful virtual trading during one time period does not guarantee successful investing of actual funds during a later time period as market conditions change continuously.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2022 Charles Schwab & Co. Inc. All rights reserved.