Published On: April 7, 2022
Home>Financial Education, News, Participatory Budgeting>3 Ways to Expand a Child’s Financial Literacy

This is a guest post from blogger JBarley. Thank you!

We need financial literacy!

Financial literacy is necessary for people to build a good life for themselves. It helps them make sound decisions and creates opportunities for them to reach their goals. The problem is that not everyone is equipped with the right knowledge or skills to keep their finances in check.

Surveys show that only a third of Americans are financially literate, with more than 20% stating they do not have someone to turn to for help. Fortunately, we can change this by helping children develop the necessary skills and build the right habits that create financial literacy while they are still young, guiding them to a brighter financial future as they become young adults.

A key part of this educational process is how adults teach and encourage kids. Here are a few ways you can do your part in promoting financial literacy in kids:

1. Start teaching financing and accounting skills early

We know that the financial habits formed in childhood carry on into adulthood, so it is necessary to instill financial responsibility from the get-go. If schools are offering classes, encourage your kids (or your friend’s kids, if you don’t have them yourself) to take these classes and practice what they learn in real life. It is especially important to engage students in real-world experiences that give them firsthand experience in handling money, such as a FirstRoot Participatory Budgeting program. If your schools do not teach financial literacy, use the resources from the Jump$tart coalition for financial literacy to advocate for personal financial education. You can check your school here:

Parents can also teach their children to set financial goals. This helps them build discipline when it comes to financial matters and teaches them the importance of being conscious of their spending. You can teach them the different kinds of savings they can set up, how to create a practical budget, and even how they might build good credit.

You may find that this foundation of personal finance motivates your children to consider careers in the financial industry. For example, understanding a personal budget can lead to a host of jobs including accounting, finance, banking, and financial services. Those with accounting qualifications can get profitable jobs in business, government, and finance, as well as money-related jobs in creative fields. Due to the global demand for financial professionals, an early education could set children up for a secure future.

2. Encourage them to read finance books

Another way kids can learn more about financial literacy is by having the right resources. There are many books that can teach important principles from people who can offer useful advice. The authors of these books have formulated tried and tested methods when it comes to financial planning that children may find useful and insightful. One of my favorites for young children is If You Made a Million, written by David M. Schwartz and illustrated by Steven Kellogg, as it teaches the basics of money in an easy to understand way.

3. Help them find an online community or forum

There are many kinds of community forums on the internet. They range from different hobbies to different business industries. For finance, the members of these communities interact with each other, offer good advice, or mistakes to avoid. Members can ask questions about managing their money or even what kind of investments are right for them.

Facebook is one place to look for a reputable online community. A financial literacy group on Facebook called Money Prodigy is aimed at kids. Here, children are offered advice on how they can start saving, make better decisions when it comes to money, and be more informed in terms of finances. Though it might seem daunting to allow your children to utilize online communities and forums, these platforms can also be a big help when it comes to learning more about financial literacy and gaining real-world advice. Moreover, you can get tips on how to foster financial literacy within your homes and communities so kids can learn, too.

It is important to educate children on financial responsibility as early as possible. This will help them become more responsible adults and help them build their future. Be sure to encourage them to take classes in school, get them the right resources, and help them connect with possible mentors. This will go a long way when it comes to their financial literacy.

Note: FirstRoot is not aligned with Money Prodigy.