Money, Money, Money! Raising Financially Literate Kids

by Laura Pearson

As parents, one of our main goals is to raise our children to be responsible and financially literate adults. To do this, it’s important to start teaching them financial lessons from a young age. The Foundry has compiled a list of tips and tricks that can help get your kids on the right path toward financial literacy.

Allowance
Giving your children an allowance is one way to teach them about money management. The exact amount will depend on the age of your child, but making sure they understand the correlation between work and money is key in this stage of their development. Make it a point to let them know that their allowance will be used for items such as snacks or toys instead of big-ticket items like a new phone or laptop.

Shopping Choices
Involvement in shopping decisions teaches kids how to compare prices and think through decisions before making purchases. When shopping with your child, make sure you explain why you are choosing certain brands over others or why buying generic items is sometimes the better option over name-brand items. This type of real-time learning experience helps children understand the concept of budgeting and how to stick within their means when it comes to spending money.

Decline Requests For Money When Appropriate
Teaching children about financial responsibility is an important life skill. One aspect of this is saying “no” to money and gift requests when appropriate. While it can be difficult to do so, explaining the importance of making thoughtful decisions about spending and saving will help children understand the value of money and how to manage it responsibly in the future.

Savings Account
Opening a savings account in your child's name is a wise step that can aid in teaching financial responsibility at a young age. By setting up automatic deposits into this account, your child will not need to worry about managing their funds, allowing them to focus on other important things. This encourages good savings habits that will be beneficial for them in the long run.

Number Exercises and Games
Introducing games and activities that involve numbers is an effective way to nurture your child's financial literacy skills. Board games give children a practical experience of using numerical concepts while providing them with a fun pastime. Taking the initiative to discuss these concepts during playtime can strengthen their understanding of related subjects outside the classroom setting.

Home Ownership Financial Concepts
It's crucial for children to grasp the basics of home ownership, including property tax implications, to prepare them for the future. They can get a better sense of what expenses to expect as adults by exploring examples of mortgage payments for specific properties based on price points. This understanding can help them make informed decisions about purchasing a home after college or graduating from high school.

Tips for Young Entrepreneurs
Encouraging your young entrepreneur to start their own business can be a great way to introduce them to the business world. With online resources and crowdfunding websites, it's easier than ever to find guidance and funding for their project. This can provide valuable lessons on finance while pursuing something they're passionate about.
 
Raising financially literate kids is a vital aspect of parenting. However, this task does not have to be intimidating. There are numerous simple steps that parents can take to achieve this goal, such as providing an allowance, teaching the concept of home ownership, assisting young entrepreneurs in starting businesses, and exploring various methods of obtaining capital. All these practices can help reassure any parent interested in fostering financially literate children.
 
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Laura Pearson is a co-creator of Edutude. Through Edutude, Laura strives to find unique, creative ways for parents and educators to encourage students to be challenged, motivated and excited by learning. In addition to her work with Edutude, Pearson is an advocate for children's rights and education. She volunteers with local organizations that promote child literacy and provides mentorship to young students seeking educational guidance.Apart from her professional work, Pearson is an avid traveler with a love for immersing herself in diverse cultures. She has backpacked through Europe and Asia, and credits her travels with broadening her perspective and providing unique learning experiences.​