When college students become college graduates, they are exposed to an entirely new and grim world. Gone are the days of charging purchases to credit cards and using loans to pay for school. The graduate’s new reality is filled with loads of debt, student loans, and a less than stellar job market. When reality hits, it hits hard. FNB Fox Valley encourages parents to talk to their families about Financial Literacy Month and ways to manage personal finances and prepare for the future.
The importance of teaching financial literacy to young adults is a topic of growing importance. A recent study found that more than 75 percent of college students do not feel prepared to make smart financial decisions for themselves. Pretty scary, isn’t it?
Teaching children about money and the proper ways of managing it isn’t a lesson children must wait until college to learn. It was reported the one-third of parents are more comfortable talking with their kids about smoking, drugs, and bullying than about money. Although these are important topics, money is a more severe of an issue. Parents should start their children on a road to financial success as early as age 5 or 6. Initiating open conversations about money and encouraging financial literacy with your children will strengthen their understanding of the financial system and may even encourage him or her to have a career in financial management.
How to Teach Ages 5-6:
-Children can learn about the concept of money by counting coins, playing with “play money,” or playing games that use toy money.
-At this age, children can also learn that money is used to buy goods and services. This lesson can be taught by taking your child shopping and allowing them to buy something small and having them hand over the money.
How to Teach Ages 7-9:
-Encourage your child to start saving money. Giving your child a piggy bank and opening a Kids First savings account are two ways to encourage smart financial decisions and include your child in money-managing decisions.
-Starting a weekly allowance will encourage your child to save for items you will not buy such as suckers, gumballs, and ice cream.
-Encourage goal-setting by explaining that instead of spending all of their allowance on small snacks or items, they can save up for a larger purchase.
How to Teach Ages 10-12:
- By this age children are capable of doing chores to earn money. Washing cars, babysitting, or caring for pets will teach them the value of money and how to earn it.
-Sit down and set goals with your child. Have him or her save for their next pair of shoes, video game, or sweatshirt they want.
-Give you child an active role in their bank account. Teach them how to sign a check and deposit it into their bank account.
How to Teach Ages 13-15:
-Teach your child to keep a log of all income and outgoing money so they can learn to live within their means. This also shows your child how much they have at their disposal.
-Educate your child about the pros and cons of credit cards and debit cards. It may even be feasible to get them their own debit card, but remember to teach them about the importance of security.
How to Teach Ages 16-18:
-Encourage your child to find a part-time job that does not conflict with school activities. This will teach you son or daughter about earning money and the value of a dollar.
-Include your child in household talks about budgeting, saving, taxes, and investing. This information will give young adults a better idea of what to expect when the time comes for them to do the same.
Most importantly, teach your children to become disciplined with money by stressing the importance of saving for the future. The lessons children learn about money will benefit them far beyond college and long into the future. Contact FNB Fox Valley to learn about all of the available banking options, so you can begin to teach your children about the importance of financial literacy.