Teaching Your Children Financial Literacy


Teaching Your Children Financial Literacy


You are Your Child's First Financial Teacher.

From time to time I like to reflect on some of my most asked questions.  One topic I get asked about quite a bit is how to teach children financial literacy. There are some school systems in this country that have made financial literacy a requirement for high school graduation, but many still have not. The lack of financial education resources in the schools results in the parents becoming the teacher.

Teachings from the Tooth Fairy

I was recently among a group of parents with children between the ages of 4 and 6, and the topic of the tooth fairy had emerged. My daughter had not lost her first tooth, so I was captivated by what the other parents had to say. One  parent had given her daughter $50 for her first lost tooth and another had given her child a gaming system. To be honest, had the tooth fairy brought me such extravagant gifts, I would have performed dental extractions on myself!

This conversation led me to examine what type of message I was sending to my two daughters. I was sure that since I have made my career teaching financial literacy, it should come easily to teach my two girls. Unfortunately, this was not the case. The logical side of my brain clearly told me that $50 for a tooth was too much, but the mommy side of my brain didn't want my child short changed.

Teach that Money has Value

The message I felt I should be promoting, is that money has a value. I should be setting limits on what they receive, and realize that it is not my budget I should be thinking about, but my child's budget. I began by heading to my local library and found a few children's books on money. They all captured the idea of saving and spending very well. After we read the books, my daughter, now minus one tooth, and I went to the toy store. The tooth fairy left $5 for the first tooth. I explained to her that she could spend the entire $5 right now, or she could perform chores around the house over the next few weeks to earn more money.

My daughter had stars in her eyes as we walked into the toy store. She was determined that she would get what she wanted for that $5. It did not take long for her to become disillusioned when she realized the toy she wanted was $20 and she did not have enough money. We stood in the store as she begged me to give her the extra $15 now, and she would do the chores later to pay me back. I realized at that moment, this would be my child's first introduction to credit. At the age of 5 I did not think she would understand the concept of interest. I did however feel that she could learn that she should not be able to purchase something if she did not have the money.

I stood my ground and we left empty handed. She did do the chores that I thought equaled the $15 and ironically, she no longer wanted the doll. This was my chance to also sneak in a lesson on instant gratification versus delayed gratification. As the years went on I did teach her about interest and we opened a bank account.

Leading by example and becoming educated yourself

What I learned from this event is that very few books can replace real life experience. I fortunately live in a state where financial literacy is taught in the schools; however, no one can be a financial role model for my child like I can be. To answer the question, “How do you teach children about financial literacy?”, the answer is simple; lead by example and become educated yourself. The more you can pass on, the more your child will learn. I have also found that sharing my own financial missteps and giving them a glance into our family's budget has also been helpful. I am not a perfect parent, but I am confident that I am providing my daughters with a sound financial education.

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Kim Cole is the Education Outreach Coordinator for Navicore Solutions. Kim provides financial education workshops and seminars to communities. Readers can submit general questions relating to personal finance, credit scoring, debt management, student loans, home finance or bankruptcy which may be highlighted in the next month's edition. All identifying information will be kept anonymous.

Please send your questions via email to DearKim@navicoresolutions.org



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