Summer School

Question: What are some ways we can help educate our children and grandchildren this summer regarding financial literacy? 

Answer:  Only one in six students will be required to take a personal finance course before receiving their high school diploma, according to nonprofit Next Gen Personal Finance. Since most students are not likely being exposed to these topics, it's admirable that you’re interested in helping to educate the next generations about these significant issues. Examples are the importance of understanding interest rates, financial trade offs, and why an emergency fund is essential.

Any time spent with children and grandchildren provide teachable moments to share experiences and money tips. There are plenty of independent study materials as well that will hold their attention while teaching money management.

It’s never too early to learn how to budget. Teens and preteens can prepare a list of expenses for the month that could include clothing, cell phone bill, entertainment with friends and meals away from home. This can lead to a discussion of responsibilities, privileges, and trade-offs. My parents gave me a set amount of money each month allowing me the chance to make financial decisions and experience the consequences when I ran out of money before I ran out of days in the month. 

Last summer, our grandson ran a snack bar out of their home providing chips, salsa, burgers, dogs, and drinks for the family. He kept tabs going for all of us and had a tip jar near the order station. He had a great time running the snack bar until I mentioned that at some point his Dad may want him to pay rent for use of the space and be reimbursed for the food and beverages! We had fun with this and calculated the square footage he was using and what the supplies cost. It was a great way for him to learn about budgeting and how to run a business. Dad never charged him, but he did learn what it takes to be successful, and that outstanding customer service and a great attitude filled the tip jar.

When talking to children about their interests you are helping them explore what they could apply to a future career. As they get closer to deciding whether to attend college or a trade school, Junior Achievement’s Access Your Future app can help them crunch the numbers and think through the costs and benefits of either option.

It’s never too early to start saving for retirement. Retirement is the biggest expense most of us will ever save for in our lifetime. You can help children understand the value of compounding and the value of starting to save early. Help them open a bank account to manage their monthly cash allotment, or guardian-type brokerage account where they can experience the power of delayed gratification.

It’s never too early to understand the importance of a good credit score. When you’re young and don’t have much money, it’s easy to rely on credit. Perhaps you have experiences that you can share about financing your first car or first home. Be sure to include how the terms and interest rate affected the payment and overall purchase price. Include in your discussion the concept of paying off credit card balances in full each month to avoid overpaying for goods and services they’ve purchased. 

By giving the gift of financial literacy you’re helping set the next generation up for success and a brighter future. Education is the greatest gift of all. We can all do our part by being thoughtful and purposeful with our power of example.

Here are a few resources for various age groups: 

Teens

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

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.”

During the summer you can have family and friends share stories of how they may have faced financial challenges or found creative ways to thrive with limited resources. Financial literacy is a gift that lasts a lifetime. Stay focused and plan accordingly. 

The opinions expressed are those of the writer as of June 19, 2022, but not necessarily those of Raymond James and Associates, and are subject to change at any time. This material is provided for educational and informational purposes only. Past performance is no guarantee of future results. There is no assurance the trends mentioned will continue or that forecasts discussed will be realized. Economic and market conditions are subject to change. All investments are subject to risk, including loss. Material is provided for informational purposes only and does not constitute a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.