Teaching Your Children about Financial Literacy (A Three Part Series)
Part 2: They are Off to School, but Your Job Continues
When we send our children off to kindergarten, many parents feel that their role as their child’s teacher has ended. As they walk into that brick building for the first time, we relinquish some of the control to a teacher, to mold and shape their young minds. However, that does not mean that our jobs of educating our children are complete.
This particularly holds true in the area of financial literacy. The schools will teach our children the value of coins and how to add and subtract money, but parents need to teach them how to use money. Here are a few ideas to do with your elementary aged child:
- Give your child an allowance. Whether it is given with “no strings attached” or attached to completion of chores is widely debated. The point is children need to have money before they can learn to manage it. A popular way to do this is to give $1 per year of age per week. For example, an 8 year old would receive $8 per week in allowance.
- Create jars labeled “Spending,” “Saving,” and “Sharing.” As a family, decide what percentage of your child’s allowance will go into each jar. Our children split it this way: 40% spending, 40% saving, and 20% sharing. This does two things. One, it teaches your child the importance of saving and sharing. Two, it begins to teach your child how to budget their money.
- Once your child has at least $20 in their “Saving” jar, take them to the bank to open up a savings account. Many banks have accounts specifically for children, with special prizes and bonuses. Your child will have the opportunity to learn to fill out deposit forms and other banking forms.
- Use weekly grocery ads to teach your child about comparison shopping and pricing. Teach them about price per unit and talk to them about quality vs. quantity. For example, the store-brand paper towels may be less expensive, but do they work as well as the name brand?
- Involve your child in planning an event, such as a birthday party or family barbecue. Allow them to help plan the meal or activity, and teach them to figure in “hidden” costs such as paper goods and transportation costs.
Most of these activities will require minimal effort from the parent, but can reap huge rewards for children as they continue down the path towards financial literacy. Check back on Monday, June 12 for the final segment of this discussion: helping your teenager with financial literacy.
For more information about Calvary University’s Family Literacy Program, check here.