Many parents believe that financial literacy and money management skills should be part of the school’s curriculum, but many believe that their child does not receive adequate financial education in school. We asked experts on how to best teach children financial literacy, and this is their response.
Financial Literacy Apps
Parents can find many financial literacy apps for children online. Most of them are free to use, with a premium option for extra features. Examples include World of Money, Famzoo, and RoosterMoney. Children can have virtual piggy banks, track savings, and schedule chores. Most importantly, these apps are equipped with helpful video tutorials, teaching young people financial topics, including budgeting, saving, and investing. Instead of the usual game and social media apps, encourage your children to learn more about finances by downloading these apps. That way, they have a reliable tool to help them become more responsible and establish smart money habits.
Simon Bacher, Creators of the Ling App.
Practical Experiences
The best way to teach financial responsibility is through practical experiences. Give children a small allowance and guide them in dividing it for spending, saving, and sharing. Our family started a “saving jar” for a particular toy. They learn patience and goal-setting as they contribute and watch their money grow, fostering a healthy financial mindset.
Onur Kutlubay, Founder of YouParcel
Leading By Example
The best ways to introduce financial responsibility to children include leading by example, giving allowances, encouraging saving and charitable giving, opening bank accounts, and involving kids in household budgeting and shopping decisions. Hands-on experience with real money helps reinforce money management lessons.
Rikin Shah, CEO of GetSure
Gamification
An effective way to engage young people in financial education is through gamification – a great example of this is Visa’s Financial Football, a fast-paced, interactive video game that helps teach financial concepts or all ages. By making what can seem a dull subject more exciting through games can help emphasize the importance of financial education in both a fun and informational way.
Worku Gachou, Visa’s Head of North America Inclusive Impact & Sustainability
Gifting Stocks
One idea that people overlook is the idea of gifting stocks for birthdays and celebrations rather than toys that cause clutter. This introduces the concept of investing to your child from a young age which can help make them feel more comfortable about investing. One of the biggest hurdles for adults to start investing is fear of the unknown. When you eliminate that, you open a world of financial possibilities. It doesn’t have to be complicated — choose a stock of a company your child genuinely likes or something they consume like Disney or McDonalds. Then check in on the investments periodically showing your child what he or she should look out for. You can open a custodial account using eTrade or another online brokerage service.
Andrea Woroch, Money-Saving Expert
Gift Cards
You can also buy them gift cards to Stockpile which allows you to buy fractional shares of big ticket stocks they may be moreexcited about like Amazon or Disney. This can be an ongoing gift you give for birthdays and celebrations to get your child excited tocontinue investing.
Andrea Woroch, Money-Saving Expert
Keep It Positive
Keep it positive and keep it entertaining, but don’t be afraid to tell your kids the hard truths and realities of finances. They can handle it; they’re smarter than you think.
Bob Weinschenk, Co-creator of FreeKick
Don’t Overcomplicate
Don’t overcomplicate the discussion. If your child doesn’t have any idea about credit scores, then don’t bother getting into credit card utilization at first. And if they don’t have a clue about stocks, don’t waste everyone’s time by jumping into a tutorial on P/E ratios.
Bob Weinschenk, Co-creator of FreeKick
Explain Purchases
The “Talk” can be about the impact of buying, selling and saving, whether it’s deciding what groceries to buy or considering the value of a (overpriced) hot dog at the stadium. Let them know why you chose to buy one item over another and explain how and why you waited to purchase something for the family.
Bob Weinschenk, Co-creator of FreeKick
Start With An Allowance
Other sound advice is to start with an allowance that has clearly understood parameters. Is it tied to chores or behavior? Will it serve as their sole source of revenue for their social or leisure-time activities, or is to be used for future savings? Clearly defining how it’s “earned” and what it covers will help kids with spending and budgeting decisions.
Bob Weinschenk, Co-creator of FreeKick
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