April is National Financial Literacy Month. For more than 10 years now, organizations such as the Institute for Financial Literacy and others have celebrated April as a time to promote the importance of financial literacy education and teach Americans how to become better managers of their money.
This year, one of the topics that is gaining attention is teaching financial literacy in our schools. Many are advocating that states should make a class in personal finance a High School graduation requirement, and in fact several states have actually done so. However, for our children to truly achieve an acceptable level of financial literacy, they have to learn about money from their parents. That means financial literacy education has to start at home.
It’s unrealistic to expect K-12 teachers to take on financial literacy education when they’re already working to raise the standardized test scores of their students in core subjects. Math, English and science take precedence. When financial education is added on as a stand-alone additional requirement, it just becomes another burden for teachers.
So what can parents do? Plenty! Teaching financial literacy education doesn’t take an advance degree in economics, only a commitment to share important information and life lessons with your child. The first thing you need to know: children begin to understand the concepts of money as young as five so you can begin the conversations when they start going to school.
Next, no money topic should be off limit. Ever time you spend, earn, save or share is an opportunity to teach your child. Don’t be afraid to talk about money (just like you shouldn’t be afraid to talk about other topics, but that’s for another blogger!) When you buy food, explain what you’re doing and the decisions you’re making. Why did you buy this box of cereal and not that box? Why did you buy the more expensive loaf of bread but the less expensive cut of meat?
When it comes time for your family to pay the bills, let your child sit with you and explain the process. This is always hard the first time around, but it is very educational for the child to understand the financial cycle: Mom and Dad have jobs; they earn money; they use that money to pay rent, insurance, utilities, etc. It’s okay for them to know what you earn because they’ll also see what you spend to care for them. Allow them to ask questions. Don’t get frustrated or defensive. This is a chance for them to see how things connect and learn how to manage money. You might even find you start changing some of your spending habits once “the committee” is looking over your shoulder come bill paying time.
By letting your child see how you manage your money, pay the bills and save for your future, you’re giving your child the best financial education possible. Show them a good example and let them learn it first hand. The gift of financial education is a gift your child will use all their life. That is the gift that keeps on giving, and it needs to start at home.