Financial Literacy for Future Generations: Empowering Your Children to Understand Finances

It’s a story we’ve seen a hundred times on sitcoms: children are sent out of the room while their parents discuss stressful “adult” topics like bills, job pay cuts, or rent increases. It is often our instinct to model these behaviors in our own families, believing that by not discussing finances around our children, we are sparing them from stresses that are not theirs to worry about. While this is true to an extent, it is also vitally important to start teaching your children financial literacy while they are young.

Just earlier this year, a third-grade teacher in North Carolina went viral for introducing financial literacy into her curriculum – a first for many school districts. Because this is not an inherent part of curricula, it is up to parents to instill this knowledge in their children. Although teaching financial literacy to your kids may not be as common as teaching them their ABCs or 123s, it will empower them with the confidence and life skills they need to be successful in the real world.

When you initiate these conversations with your children, consider starting with a discussion of how money functions, not only in our society, but specifically within your family. How do you prioritize spending on needs and wants? How might your child think about this in their life? For example, maybe you give them a few dollars to spend on your weekly grocery run. What do they need for their school lunches? What might they want while they’re in the store?

Introduce the concept of saving early. While piggy banks are a classic, there are lots of other interactive options available that allow children to save for a specific goal. Maybe they have an expensive toy on their wish list, or maybe there’s an activity they want to do. Consider opening a savings account with your child to reinforce the idea that saving is a path to achieving future financial goals.

Teach your children the value of working. Even if you do not give your children a set weekly allowance, think about offering some sort of compensation for chores that are above and beyond. Could your child help wash the car, wash windows, or mow the yard for a few extra dollars? Depending on your child’s age and ability, you can simultaneously teach them practical skills while allowing them to see the financial impact of their hard work. Or, if you are uncomfortable paying your children yourself, check to see if a friend or neighbor has some odd jobs. Maybe a dog needs walked, leaves need raked, or weeds need pulled.  

Discuss budgets. If you have an upcoming large purchase, involve your children in the process. How do you make your decision? Do you compare prices, retailers, or keep an eye out for sales? Modeling this for your kids allows them to see how smart spending works in your family.

More than anything else, make sure that financial discussions are a regular part of your family’s conversations. Finances should not be a taboo topic; having these conversations now allows your children to become well-informed about their future finances. With your guidance, your kids can build a solid financial foundation that will benefit them for years to come.

If you have any questions or would like to speak to a financial adviser about specific circumstances, reach out to our office at (469) 212-8072 or visit www.gdswealth.com. We would love to help however we can.