8 Tips from a CFO to help parents teach their children basic financial literacy
With April being Financial Literacy Month, what better time to talk to our very own CFO, Ed Stassen, about the importance of teaching basic financial literacy to your kids. Whether you are in the classroom, at home, at the grocery store or virtually anywhere else, you quickly realize that numbers are the foundation of everyday life. This means teaching and learning early financial concepts can be vital to getting a head start on a child’s future!
Ed’s love of all things numbers started early, too. “When I was a kid, I learned about financial literacy through collecting stamps, and later by starting a paper route. These activities put me on the track to understanding values of money and products, knowing how to exchange money with others and, most importantly, when to spend and save the money I earned,” said Ed. “I can honestly tell you that these were stepping stones to bigger life events – how to pay for college, manage finances – all of which came easier to me because I was already comfortable with the concepts. My point is, teaching and comprehending these ideas can quite literally become invaluable.”
Many adults are apprehensive about numbers and finance simply because they don’t take the time to understand it. In order to become comfortable with money and how to manage it, children must first understand the role of money in everyday life. Here are 8 simple CFO-inspired tips for parents teaching their little ones about basic money matters.
- Communication Is Key
- It’s important to talk to your kids and explain to them what you’re doing when making certain transactions or looking at items at the store. Ask them questions like how much do things cost? How much change will you have after you purchase it? What could you get instead that is of equal or lesser value? These are the sorts of questions that will keep kids engaged in real situations during their continuous learning of financial literacy.
- Pretend Play Can Teach Real Lessons
- If you are not out in the real world, recreate real world experiences at home. With products like the Pretend & Play Calculator Cash Register, you can create fun exercises and playtime scenarios that kids will be eager to add their own personality to, such as a pretend grocery store, restaurant, and many more. Experiential learning and making lasting memories can be an essential key to long term retention of these basic concepts.
- Using Real Money Can REALLY Work
- When kids are able to utilize the same tangible items that their parents do, it provides a sense of realism; that they are learning to be like mom and dad. Don’t be afraid to use REAL cash so kids can see it, feel it and value the experience even more. And when you’re learning at home, using realistic play money like our Play Money is the next best thing!
- Make a Chore Chart
- To help children begin their journey, assign age-appropriate chores and provide an allowance, reinforcing the importance of working for a dollar. Discuss how to spend or save allowance money based on what they want to buy.
- Start Saving
- Encourage your children to establish a goal (like a toy or game they really want, or an experience they’d like to do) and save their money to purchase at a later time. This will teach them money management and prepare them for the idea of budgeting and saving.
- Don’t Forget The Importance of Donating
- Much like setting up a savings fund for themselves, kids should become familiar with a donation fund for others. Not only is this an additional way to teach savings and exchanging, but it serves as an additional social lesson of doing good deeds with your money. Have them start with picking a set amount; for every dollar they earn, set aside 10 percent to donate (the Wise Owl Teaching Bank is perfect for setting aside savings and donation funds). Before you know it, they will have accumulated enough to give back to their community in a big charitable way.
- Be a Role Model
- You don’t have to be a finance expert to teach your children important lessons about money that will benefit them in the future. They just need to know they have a strong role model who they can learn from and guide them. Talk about work, show them how you are saving, or you can tell them why you didn’t buy one thing over another to try and save money.
- It Isn’t All About Numbers; It’s a Social-Emotional Exercise Too
- So much of how we interact with money on a day-to-day basis is as social as it is mathematics. From buying a coffee at the coffee shop to the checkout line at the grocery store, we are constantly interacting with others when exchanging money. So, have your child become part of that interaction! Encourage them to physically hand the grocery store clerk the bills, teach them to say thank you when you receive change, or ask them to count the change to make sure it’s correct. These practices are often forgotten valuable lessons when speaking to basic financial literacy.
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