I remember my dad and me sitting in front of a banker’s heavy mahogany desk the day we opened my first checking account. I was about 10 at the time. I remember reciting my Social Security number, which I was told to memorize, to my dad’s banker as she set up the account. It was an exciting day; I got to pick a sailboat theme for my first book of checks.
My dad being an entrepreneur, I feel fortunate to have grown up in a household where I overheard conversations about stocks, lines of credit, and things like that. Most children, however, are not well exposed to financial topics. An insightful article appears on CNBC.com titled “Five Steps to Turn Your Child into a Financial Whiz” which highlights a gap in many children’s financial education.
I am not a parent, so I cannot speak from experience. Having said that, I believe articles like the CNBC one are good if they can stir parents to educate their kids about money matters. I have long held the opinion that financial literacy should be a more significant part of young people’s education, either in the school setting or at home – or both.
The abovementioned article cites a few disheartening statistics about parents teaching their kids about money. According to Ally Financial, 83% of parents said that saving is one of the most important financial skills for children to learn, but 9 out of 10 parents admit they do not talk to their kids regularly about it. Parents have the best of intentions, but they oftentimes avoid conversations about money.
Perhaps parents feel their kids deserve a childhood devoid of the financial anxiety that we adults all face, and they feel that talking about money would spoil the kids’ carefree years. Or perhaps talking about money feels taboo in general, and parents do not want to have to explain what they earn and how they spend. In any case, the article encourages parents to overcome these perceptions and to teach children the lifelong lessons of budgeting, saving, and investing.
A few suggestions the article offers are as follows:
- Explain that funds are finite.
- Teach children to save for a goal, even if it is a short-term goal.
- Educate kids to spend within reason.
- Open accounts for saving, and also teach children the basics of investing. A college savings account, for instance, could be a tool to explain to a child that their own future is what the investments are designed to benefit.
Even as adults, sometimes it is a challenge to stay on the financial “straight and narrow” with budgeting and the like. But for their own benefit, growth, and understanding of the world, it is important to teach children about personal finances. One day soon they, too, will be picking out their favorite checkbook artwork.