I Wasn't Taught About Money — & I Want Better for My Kids
Like most of us, my school curriculum did not include the basics of budgeting, financial planning, and investment — excluding that one lesson about how to fill out a paper check, which was squeezed in between how to sew a pillow and how to read a recipe. I wasn’t modeled these financial literacy concepts at home either — that’s a function of growing up in a single-parent home that scraped by paycheck to paycheck rather than a reflection of my mom’s parenting.
Taken together, it means I never learned the basics of financial literacy — certainly not financial planning and investing. As a result, as an adult, despite my best efforts to learn now, I always feel like I’m playing catch-up. It’s not a pleasant feeling, especially since now I’m the one running the single (solo) parent household and it’s my job to teach my children.
I want better for my kids. I want them to walk into a room with a financial advisor and feel comfortable expressing their opinion. I want them to be confident investors who make choices based on intentional planning and thoughtfulness. I want them to learn all the things I didn’t. (If Instagram’s 2023 Trend Report, which noted that “financial literacy is a priority skill for Gen Z” is any indication, they want better too.)
Wanting better is easier said than done. I’m dealing with tweens who still vaguely believe credit cards are magic pieces of plastic that make the things you want simply appear. Luckily, according to financial expert Jen Hemphill, “It’s never too late. A lot of grown-ups never talked to their parents about money, right?” In a conversation with NPR, Hemphill encouraged parents to start talking about money with their kids even if they themselves aren’t entirely comfortable or confident in the topic. “The sheer act of talking about it brings confidence.”
Talking about it is certainly a great start, but it is only that — a start. This year, I’m committed to teaching my kids about financial literacy, and here’s how.
Giving Them Opportunities to Earn Money
In an article for Fatherly, Dr. Matthew Pagirsky, neuropsychologist and certified New York State School Psychologist, noted that “research suggests children who receive [an] allowance are more sophisticated about money than those who don’t.”
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Paying my kids to help out around the house doesn’t sit quite well with me, though. There’s something slightly uncomfortable about the idea of paying my children to help out around the house. We’re all in this family unit and all need to chip in. That being said, I like the idea of creating responsibility and understanding the connection between effort and income. And the truth is, most people, kids included, value money differently when they earn it.
For me, a better option is a hybrid approach. In this version, my tweens have some chores that they’re responsible for because they’re a part of the family, and others which, when completed, will earn them an allowance.
Teaching The Basics of Savings and Budgeting Through Setting Goals
Once there’s money in hand, the next building block toward financial literacy is learning how to save and budget.
“Saving teaches discipline and delayed gratification,” Sam X Renick, co-creator of Sammy Rabbit, a children’s character and financial literacy initiative told Forbes Advisor. “Saving teaches goal-setting and planning. Saving stresses being prepared. Saving builds security and independence.”
One way to teach kids about saving is to help them identify a savings goal. For my son, for example, it’s a new gaming system. The idea is that each week he’ll put away some of his allowance to save up for that gaming system.
With this approach, kids get to experience the “win” of reaching their goal.
Educating Them On The Fundamentals Of Investing
Earning, saving, and budgeting are undoubtedly important concepts related to financial literacy, but the real test of financial literacy is investing — and this is where I always feel slightly behind. Understanding how, when, and why to invest; understanding the vocabulary related to investment; and understanding the risk-benefit calculation are the real principles of true financial literacy, and the keys to building long-term financial health.
The best way to learn about investing is to invest — see the process and participate in it. Investopedia encourages parents to open custodial accounts at brokerages like Charles Schwab. For kids, “[t]here’s nothing like firsthand experience to teach them about the volatility of different investments and the need for a long-term outlook.”
Giving Them Practical Experience With Credit Cards
No conversation about financial literacy is complete without a discussion about credit and credit cards. Regardless of your thoughts on credit cards versus cash, there’s no doubt that our children will need to understand how to use a credit card, how to build credit, and how bad credit can impact your future.
“It’s important to teach your kids about credit early on, because establishing good credit takes time,” Erin McCullen, head of consumer deposit products at Bank of America, told Real Simple. “Building credit from a young age through responsible habits can help pave the way for major purchases and life moments, since credit impacts future living arrangements, the ability to purchase a car, and even employment opportunities.”
Much like investing, the best way to teach kids about credit is through real-life experience. My bank offers a kids’ credit card, which I can put money into and monitor how much is going out. (Side benefit: I can pay them their allowance through the bank versus having to find cash every week.) Another option is to get them their own prepaid card through Greenlight.
Every day is a chance to start something new. That being said, the start of the calendar year is an easy milestone from which to implement a new financial mindset. It’s a memorable landmark from which to mark progress, which is important — especially when that landmark can help my children lead more financially stable lives.
Because the truth is, regardless of where life takes them, they’ll be more secure if they’re traveling on a foundation built with a strong understanding of financial literacy.
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