Help your child build financial literacy early by modeling smart money habits, discussing wants vs. needs, and engaging them in decision-making. These skills set the foundation for lifelong success!
“The number one problem in today’s generation and economy is the lack of financial literacy.” Alan Greenspan
Key Concepts:
● Research tells us that our children’s unconscious notions around money are largely based on our behavior, and that our modeling starts EARLY - much earlier than we think.
● Despite what many of us believe, research shows that children do not receive instruction about spending habits, savings, or future money management from school. This means the lion's share of the responsibility is on parents.
● While our children are too young right now to fully understand the concepts around financial literacy, research tells us that many skills that are essential to our children’s future financial behavior are already in development. This includes impulse control, delayed gratification, symbolic representation, and the ability to plan ahead.
● Research shows that financial behavior is shaped and impacted by gender. Studies show that women are less likely than men to receive instruction around spending, saving, and investing.
What to do:
● Bring your child on errands with you like food shopping or going to the bank. Doing these types of tasks AND enjoying the time together gives your child a window into important “adult” activities related to money.
● Engage in conversations that model the difference between WANT and NEED. One way you can do this is by having a list (on your phone or on the fridge) for things your child asks for. When your child asks for something, you can ask “is that a want or a need?” and then write it down on the list. You can review the “wants” on the list before a special occasion (like a birthday or holiday).
● Model decision making related to money. The research tells us that if parents model decision making related to finances, it is likely that their children will try to engage in similar behavior.
● Support your child as they engage in decision making. Offer up your child to options - for example, we can go to the candy store now and get something small, or we can wait until you earn a little more money and go at a later time. Sit with them while they think through these decisions.
● Continue to support counting and stretch your child’s thinking by bringing in comparisons. Use vocabulary like bigger/smaller, tighter/looser, heavier/lighter.
● Talk about your work OR someone else’s work that your child is exposed to. This is important when it comes to understanding that people earn money by working.