Small Savers to Money Masters: Navigating the Path to Childhood Financial Literacy
by Jerin Young CFP® CKA® Senior Associate Financial Planner |
September 16, 2023
Ever since I can remember, I’ve been a saver. When I would get candy at parades or during holidays, somehow my haul always lasted much longer than that of my siblings. So much so that I remember staving off my brother’s and sister’s attempts to snatch a piece after their candy was depleted.
As I matured my “saver” tendencies continued and when I started earning my own money in high school, I saved a good portion of my paychecks. During my sophomore year in high school, I took a money management class that piqued my interest in household finances and financial planning. I attribute a lot of where I am today to that class and to the generous couple at my church who allowed me to see every detail of their household finances to complete my final project.
Throughout college, I was able to save a good portion of my income and I spent only when necessary or if I had a planned larger purchase. As an adult, not much has changed and I am thankful for experiences I had when I was younger that helped shape my perspective about “adult money.” However, in those early years, it just came naturally to me, and I don’t remember my parents talking with me that much about money. I know that my interest in finances has helped me out so far in life, but that won’t necessarily be the case for everyone. It’s crucial for parents to take an active role in teaching their children about money.
Reflecting on my own past experiences with money makes me think about how my children – who are 3 and 1 – will experience and learn about money. It won’t be long before we will need to develop a plan to educate them and involve them in financial experiences.
According to a 2018 article by Beth Kobliner, “Children can grasp basic money concepts by age 3, and by age 7 many of their money habits are already set.” The article goes on to explain how it is important to talk to your children about your family’s money values, the value of a dollar, and to include your children in financial tasks so they can get real world learning experience. The knowledge parents can impart, and experiences offered are invaluable for your child to prepare for their future and to set them up to be able to make wise financial decisions.
A 2023 GOBankingRates survey showed that 57% of respondents said that a lack of financial understanding has impacted their ability to be financially prepared for the future, and 34% of respondents said their parents never discussed money topics with them.
I was lucky to have a great financial literacy class offered at my high school, but that may not be the case for each child. According to NGPF.org, only 23 states have a requirement for high schoolers to take a personal finance course before graduation, some of which only require the coursework to be integrated into an existing course. Additionally, a 2022 GOBankingRates survey showed that 38.8% of GenZ reported learning about personal finance from TikTok, YouTube, and other social media outlets, while only 22.7% reported learning from their parents or family. These studies show that even with some requirements in place, many kids are undereducated in the school setting on personal finances and underscore the importance of discussing financial topics at home.
As these trends continue it makes sense that fewer children are getting education from their parents, because their parents didn’t have exposure to the information in their childhood either. It can be overwhelming to get started, especially for parents who may not be confident in their financial knowledge base. Rest assured there are many resources available out there to help parents teach their children and to educate adults and young adults on financial topics.
Below is a list of available resources and articles that have great tips for parents to start education at any age:
For the adults:
Educating children about personal finances is essential for future success. Parents can take an active role in teaching their children about managing money by starting early, involving children in family finances, using educational resources and technology, and being a good role model. While social media platforms like TikTok may offer financial literacy information, it's crucial to ensure that the information is accurate and aligns with a family’s values. By educating children about finances, parents can help them develop the skills they need to make wise financial decisions throughout their lives.
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