When you look at the children in your care and your community, do you long for a way to help them learn more financial skills than you received when you were a child?
One way to ensure that your children and the children in your community have a better chance of living a thriving life is to make an effort to teach them good financial literacy skills when they are young. Then, as they grow older, they can make good decisions that compound on each other instead of the costly mistakes it’s so easy to make on the brink of adulthood.
At RaiseUp Families, we have a vision to see families rise out of poverty and create a better future for their children. Part of that vision includes helping parents and educators find resources to provide good financial literacy to the next generation of children.
In this article, we’ll explore the basics of teaching money management skills to children, and then explore helpful resources for parents and educators in the Houston, TX area and beyond!
Let’s get started!
In many ways, money and the woes that come with it are the realm of adults. We sometimes look back longingly at childhood, remembering a world where we didn’t have to think about stretching our paycheck to cover the bills.
But so many of our money habits start in childhood. Simple concepts like immediately saving a portion of your paycheck instead of letting it burn a hole in your pocket are learned early on, and our adult financial behavior often reflects the lessons (or lack thereof) we absorbed as kids.
If we teach kids the basics of money management, we give them a foundation of responsible financial habits that last a lifetime, making them more likely to avoid debt, make smart spending choices, and plan for the future as adults. It also helps them develop critical thinking skills, a sense of independence, and confidence in making decisions about money.
Although many resources and programs are available to help parents and educators teach children about money, which we’ll explore later, there are four basic aspects of money management that you can start teaching children when they’re small.
These aspects are: earning, saving, planning, and shopping.
Earning:
Teach the children in your care that money doesn’t appear out of nowhere—it comes from doing work and earning that money.
First, explain the concept of a job and what it means to work. From a very young age, you can point out grocery store clerks, mail carriers, the road construction crew, etc, and explain that these people are doing a job, which earns money.
Give children age-appropriate tasks to do for money, such as watering plants or pulling weeds. Although you can pay them to do their everyday chores if you wish, it’s nice to give them “optional” work they can do. That way, you teach them to take initiative if they want to earn money.
As they age, encourage them to think of their own business ideas. Would they like to set up a lemonade stand? Sell homemade bracelets? Set up a sidewalk-shoveling business in the neighborhood when it snows? Remember: even if their initiative fails, it’s still teaching them valuable lessons, so try to be supportive without interfering.
Note: If you live in the Houston area and your teen is ready to get a job, Workforce Solutions has a helpful Youth Services Program to help young people (ages 14-24) enter the workforce!
Saving
When children earn money, teach them how to save it. Start with a simple piggy bank. Help them count the money in the piggy bank now and then, and explain how the longer they save, the more things they’ll be able to buy in the future.
As they age, teach them to automatically set aside some of their money as long-term savings. Talk to your local bank and ask if they have money programs for children. Often, you can open a joint savings account with your child, so they can learn to put their savings in the bank.
Planning
As the children in your care learn to save, teach them to plan by helping them save for something specific.
This starts with something as simple as a toy they want to buy, helping them save money until they can afford it. You can also save for something as a family, such as a vacation. Use some sort of visual representation for money, such as a thermometer chart. Give your child choices, like, “We can go out to eat tonight, or we can eat at home and put those savings in the vacation fund.”
Finally, when it’s age-appropriate, teach children to set aside a percentage of money for long-term savings, such as a future car or college fund, as well as a percentage for short-term purchases they want to save up for.
Shopping
It can be easy for children to see stores and websites as magical places where you can get anything you desire with a small click or swipe. Your job is to teach them that money is limited, and shopping requires careful consideration and planning.
First, talk to your children about the purchases you make, and explain the difference between “needs” and “wants.” If your children ask you to buy them something, prompt them to identify if that item is a want or a need.
Then, teach them the concept of “shopping around” by pointing out different product options as you shop. Can they help you find the cheapest brand of peanut butter? Be sure to note the “price per oz,” and explain why paying more for a better or healthier brand might sometimes be worth it.
Then, as they earn their own money and wish to spend it, talk to them about “needs vs wants” and “shopping around” as they make their own purchases.
Earning, saving, planning, and shopping are the four basic money concepts that children can start learning very young, but as they get older and approach their teens, you can begin to teach a few more complex financial concepts, such as borrowing and protecting.
Borrowing
After explaining concepts like loans, interest, and how credit cards work, you can work with older children and teens to get hands-on borrowing experience by:
Protecting
Finally, older children and teens can start to learn about protecting their assets. This starts, of course, with getting a bank account. But they should also be learning about insurance. By the time they start driving, you should involve them in the insurance process and ask them to pay at least a portion of the cost so they feel they have a stake in it.
Although we’ve given you some practical tips above, if you want to go deeper, you can find many useful resources online that will help you teach financial literacy skills to your children!
If you’re an educator looking for curriculum resources to teach financial literacy to students, here are some great options.
Whether you’re a parent, an educator, or a community member, you have a hand in shaping the next generation of young people into competent adults who know how to handle their money well and make good decisions!
Here at RaiseUp Families, we want to help you in that journey by providing you with support and resources so that you can provide a stable home and education for your children.
Whether you need help with financial goal setting, accessing community resources, or getting out of a tough situation, we will do our best to help you directly or point you to one of our partners. Reach out today!
Finally, if you’re interested in learning more about what we do, you can read our blog post about real stories of women who have found success with our program.
