$1 + $1 = Family fun with financial literacy
Just like teaching children to read, it’s good to get kids off to an early start with financial literacy. Lessons can start at preschool age and continue as your children grow in the classroom of your own home.
How much do things cost? How do you earn money? What are typical household expenses? A foundation in financial knowledge is as valuable as the traditional reading, writing and arithmetic, and it can be simple and fun to teach to children.
The 529 Roadmap for their Future, from the College Savings Plans Network, offers some easy and entertaining methods to help children learn financial literacy at any grade level.
Preschool. Play games that involve money like “grocery store.” Use grocery items from your cupboards, bathroom, etc. Make your own play money (or use actual money) and place items in a “cart” and explain what each item costs, and that the more you spend on those items, the less you have to spend on other things, like personal items such as toys. This teaches your child about the value of money and the cost of everyday items. It also can be a valuable lesson regarding the cost of food, and how important it is to not be wasteful.
Third grade. When your child receives money (whether from the tooth fairy, for chores, as holiday or birthday gifts, etc.), begin to discuss the value of dividing it up to spend on something immediately, save for a short-term goal, save for a long-term goal and give to a cause or person your family cares about. Teaching about the value and impact of generosity is critical to your child’s development.
Sixth grade. Teach your child about budgeting. Let them manage a small household budget – like the monthly household snack budget. Give them a set amount of money, then let them choose which items you will purchase. Challenge them to make the money last all month. You can also begin to acquaint your child with the concept of priorities so that he or she can begin to understand why your family chooses to focus its attention in the way it does.
Eighth grade. Encourage your child to take on side jobs outside of your house to earn a little money—things like babysitting or mowing lawns.
10th grade. Your child will be reaching driving age soon. Have you talked about a budget for this? Is your student getting his or her own car to drive back and forth to school and to extracurricular activities? Have you worked out a payment plan for them to pay for part of the car, car insurance, gas, repairs and maintenance? This can be a big-budget item and that comes with significant costs. If you are making payments on their car, this is an ideal time to talk about debt and how paying it off works. Explain interest rates, loans and credit scores and how paying your bills on time affect all those things.
The Roadmap also addresses educational costs, including 529 plans and student loans. It is available for download here or at 529forcollege.com, along with more college savings information and resources.