Question:  

Our kids are in middle school and high school. How can we help them with financial literacy?

Answer: 

Financial literacy is the gift that lasts a lifetime. Current economic circumstances provide examples to share with our children regarding financial tradeoffs, interest rates, and the importance of having an emergency fund. Only one in six students will be required to take a personal finance course before earning a high school diploma, according to nonprofit Next Gen Personal Finance.

Here are money tips and topics to discuss with the children in your life, plus videos and games, also known as study materials, which will hold kids’ attention while teaching them money management. 

Budget

Our son-in-law established a contract when the grandkids were preteens outlining what expenses he’d pay for and then gave them a set amount to spend each month for extras. They learned the importance of building a reserve for unexpected expenses. Giving them a paycheck of sorts in exchange for household responsibilities allows them the chance to make financial decisions and experience the consequences firsthand. We love watching them take excess reserves and buy gifts for each other or saving for something special. 

Higher Ed

This summer, our family is going on the college tour with our granddaughter. As preteens and teens get closer to choosing between attending college or a trade school, exploring what their interests are helps them explore how to apply this to a future career. This teaches adaptability, something of value in a changing economic landscape.

Junior Achievement’s Access Your Future app can help crunch the numbers when deciding whether to attend college or trade school and help them think through the costs and benefits. If you have a child already attending college, you know that timing is everything. Yale researchers have found that graduating from college in a bad economy has a lasting negative impact on wages; many students are considering gap years and graduate school because of this.

The Roots of Retirement

We all want to raise a child who will hit the ground running when it comes to saving for retirement. Personal finance experts say we should let our children know that retirement is the biggest expense they’ll ever save for, and it’s important to start early. To help them understand the value of compounding, help them open a savings account (or guardian-type brokerage account) where they can experience the power of this phenomenon for themselves.

Extra Credit Knowledge

When you’re young and don’t have much money, it’s easy to rely too much on credit and jeopardize your financial future. Help your child understand the importance of a good credit score and explain how you maintain yours. Share stories about how you financed your first car or house and explain in concrete terms how the interest rate affected the overall purchase price. Finally, consider adding your teen as an authorized user on your credit card and teaching them how to read a statement and pay the balance in full each month.

Homeschool Resources

For teens:  Search ngpf.org/arcade for web-based games like “Money Magic,” “Payback,” “Stax” and “Credit Clash”

For younger kids:  Schoolhouse Rock! vintage videos like “Budget” and “Dollars and Sense. ”Cha-chingusa.org offers Money Smart Kids videos like “Do it Passionately” and “Saving for Success”

In giving your child the gift of financial literacy, you’re helping set them up for a brighter future. Through a purposeful approach, we can all do our part to raise the next generation of resourceful citizens.

Teachable Moments

Encourage family and friends to share stories of how they thrived during a recession or found creative ways to stretch a budget. Consider helping your child get started with investing, keeping in mind their investments will change calculations for college aid. Introduce your family members – even the younger ones – to your advisor, who can act as a teacher’s aide for financial literacy. Stay focused and plan accordingly.