retirement

4 Ways to Share Your Money Smarts with Kids

Every day presents lots of opportunities to teach children about spending, saving and investing, and it's not as hard as it sounds. Here's how to get started on lessons that can enrich lives.

Do you know anyone who’s struggling with managing their personal finances?

You probably do. One in 4 adults (25%) do not pay their bills on time, and almost 1 in 3 millennials (32%) feel not at all or not very knowledgeable about how their credit score is determined, according to a survey from the National Foundation for Credit Counseling.

Clearly, people need to know more about personal finance. The good news is that it’s easy to learn — even at young ages. In fact, the more kids learn about money, the better they manage it when they become adults. Indeed, high school students who take personal finance classes have better than average credit scores and lower debt delinquency rates on credit accounts as young adults, according to a report from the Financial Industry Regulatory Authority.

Unfortunately, only 17 states require that high schools teach personal finance, says the Council for Economic Education. As a result, the average high school graduate lacks basic personal finance skills, causing many to struggle throughout their lives with budgeting, saving, borrowing, spending and investing wisely.

Because schoolteachers aren’t providing this education to our kids, you must. That might sound a bit intimidating, but teaching personal finance to youths — even kids as young as 3 — doesn’t have to be daunting. Here are some ways you can improve the financial know-how of the young people in your life:

Start now

Begin casual conversations about money. There are lots of opportunities.

  • When preparing your tax return, talk about the role of taxes in society.
  • During the holidays, talk about giving to charity and those in need.
  • Trips to the grocery store or mall can lead to natural chats about spending, credit cards, delayed gratification and the need to make choices.

The most important thing to do is to just start. It’s never too early to help children become financially savvy.

Read and listen

There are lots of books, podcasts, blog posts, TV and radio shows, and even apps that provide low- or no-cost financial information. For example, I’ve dedicated my career to teaching consumers about personal finance, through my weekly radio show and online education center. And last year we published our first children’s book on money for 4- to 8-year-olds, called The Squirrel Manifesto, which helps you have healthy conversations with children about money and educate them on the four fundamental money principles: tax a little, spend a little, save a little, give a little.

Ask for help

While it can feel uncomfortable to talk candidly about money, having a conversation with friends, family or a financial adviser can be incredibly helpful. When someone comments or asks about financial issues, take the conversation seriously, and invite a financial professional to help explain complex topics.

Educate children early

It’s not enough that you educate yourself about personal finance. You must also help children form healthy relationships with money.

By starting to teach people when they are young, we can help the next generation enjoy a healthier relationship with money throughout their lives.

About the Author

Ric Edelman, Founder

Chairman of Financial Education, Edelman Financial Engines

Ric Edelman is a founder and Chairman of Financial Education and Client Experience at Edelman Financial Engines.

Most Popular

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

The IRS has an online tool that lets you track the status of your stimulus checks.
February 19, 2021
Want More Tax-Free Retirement Income? One Man’s Whole Life Decision
life insurance

Want More Tax-Free Retirement Income? One Man’s Whole Life Decision

Whole life insurance might not be something that’s on your retirement planning radar, but for this client, here’s how it served his need to control ta…
February 23, 2021
The Current Plan for $1,400 Checks
Coronavirus and Your Money

The Current Plan for $1,400 Checks

Here's what you need to know about the stimulus check plan currently being considered in Congress for President Biden's COVID-relief package.
February 18, 2021

Recommended

33 States with No Estate Taxes or Inheritance Taxes
retirement

33 States with No Estate Taxes or Inheritance Taxes

Even with the federal exemption from death taxes raised, retirees should pay more attention to estate taxes and inheritance taxes levied by states.
February 24, 2021
Switch Accounts for a Better Yield?
Financial Planning

Switch Accounts for a Better Yield?

If your current account has a reliable history of strong yields, it might be worth sticking around.
February 23, 2021
Money Conversations You Should Have Before Marriage
Brandon Copeland

Money Conversations You Should Have Before Marriage

Kiplinger.com contributing editor and NFL linebacker Brandon Copeland has Valentine's Day (and beyond) advice for couples who want to improve their fi…
February 11, 2021
10 Places That Will Pay You to Live There
real estate

10 Places That Will Pay You to Live There

Working remotely? You may want to check out these places that'll pay you to move there.
February 9, 2021