Is your child prepared for the future? Only one-third of adults can answer at least four of five financial literacy questions on topics like mortgages or interest rates.1 Unfortunately, not being familiar with financial literacy topics can hinder economic opportunity and mobility.
When you teach your child about money, the knowledge you instill in them will carry over into adulthood. Financial socialization – the process of learning knowledge and behaviors promoting financial well-being – begins in childhood and continues throughout your lifetime. Because of this, early childhood experiences have a significant impact on financial behaviors later in life.
Below are a few ways to empower your child to grow into a financially capable adult, based on their age group.
Developmental stages and money tips
1. Executive function (ages 3-5)
This time is a building block for future financial well-being. Give children responsibility for planning, executing, and assessing their own learning. E.g. Keep kids focused on a savings goal or ask them to delay gratification (no cookies until after dinner!).
2. Financial socialization (ages 6-12)
Financial socialization is influenced by factors such as: school, parents, or peers who exert strong influence. Research demonstrates receiving an allowance does not change savings behavior as an adult unless combined with parental oversight as to how the money is spent.2 If you give your child $5 for folding the laundry, provide guidance for budgeting and the necessity of savings. Over time, they may be able to afford something even better!
3. Financial knowledge and experience (age 13-21)
During these years, many people get their first job, credit cards, and loans. These opportunities allow youth to develop knowledge and skills which will underline financial decision-making in adulthood. Experience promotes confidence in your ability to manage personal finances and provides opportunities to challenge habits or assumptions.
Here at General Electric Credit Union (GECU), we offer feature-rich accounts to help young adults 15+ manage their money responsibly. Debit card controls allow you to set spending alerts and maintain control over their debit card, while our Classic Secured credit card will help them build credit (plus, no annual fee!).3 From encouraging your child to spend and save to helping them set financial goals, there are a wealth of ways to teach youth financial literacy topics. Get more tips by watching GECU’s on-demand webinar Teaching Youth Financial Responsibility.