Despite financial education being one of the most important lessons to shape our adult lives, it is not something many people learn until much later in life. As a parent, you have many “talks” with your children, but too often the “Money Talk” isn’t one that happens until it is too late.
Respondents in the Ohio Credit Union League’s 2018 consumer survey indicated they considered lessons from parents extremely important to a child’s financial literacy. However, research suggests that’s not happening.
In that same survey, 61 percent of respondents said they received most of their financial education through experience and life lessons. Only 23 percent felt they had received financial education from home and – surprisingly – only 3 percent of Ohioans received financial education in the classroom.
As a result, Ohio’s teens may not be graduating high school with financial know-how.
Each year, The National Financial Educators Council administers a 30-question financial literacy test to participants ages 10 and up in all 50 states. Teens in Ohio, ages 15 to 18, averaged 60.32 percent on the test. Nationally, students of the same age scored an average of 61.11 percent
Parents want their children to have a good handle on finances before they leave the house in their late teens or early 20s, but most aren’t sharing the necessary wisdom to make that happen.
In the 8th annual Parents, Kids and Money survey, conducted by T. Rowe Price, 69 percent of parents have some reluctance discussing financial matters with kids. And, 35 percent of parents rated talking to their children about family finances as either very or extremely uncomfortable – ranking it alongside talks about death and drugs. Partly, parents may feel too self-conscious about their financial situation to be comfortable sharing advice with their children. This survey also found parents who have declared bankruptcy are 24 percent more reluctant to discuss money with their kids. And, parents carrying more than $5,000 in credit card debt are 14 percent more likely to feel uneasy having those financial conversations.
“Financial literacy” is an easy term to define, but a more difficult one to put into practice. Here are some tips to help you equip your children with a bright financial future:
Set an example. Children who consistently see their parents pay the bills on time and keep a budget are more likely to adopt those practices in their own lives. Parents who have made financial mistakes should also share the experience with their children. That knowledge can prepare kids to avoid the same mistakes with their money in the future.
Make savings a tangible concept. Encourage younger kids to collect spare change in a clear jar or container so they can see their savings grow. Each time the kids want a small treat, parents can offer to put the money they would have used to buy the treat into the “savings jar,” instead. Once the jar is full, children can count the money and use the funds to purchase an extra-special treat. That way, they’ll associate a sense of excitement with savings. They’ll learn that delaying gratification can lead to a greater payoff down the road. Also, be sure to stop by DoverPhila Federal Credit Union during Youth Week from April 16th through April 21st to earn extra saving bonuses on deposits made to their youth accounts.
Have kids learn with their own money. Kids will learn the value of a dollar better if it’s their own. Younger children who are paid a small allowance for chores they complete around the house will learn the concept of working for money. Kids can then begin to spend their own money on some of the things they want. They’ll begin to appreciate what these items actually cost and will be more open to lessons about price comparison.
Get kids familiar with banking. Parents can make a trip to their financial institution an exciting event for younger kids. Let them in on the process – maybe even let them press the buttons on the ATM or help to fill out a deposit slip. They’ll feel included in adult chores and won’t feel intimidated by banking later in life.
Get help. DoverPhila offers Banzai, an award-winning, web based financial literacy game, for free to its community. The credit union also offers other programs and events geared towards fostering financial literacy in kids, teens, and adults; as well as a financial counselor.
For more information about financial literacy call the credit union at 330-364-8874.