According to recent surveys of American families, many kids are getting themselves into debt by age 21. I wish I could say this surprises me, but I’ve seen first hand how easily this happens. I was furious when my son, barely 18, unemployed, and attending a local community college, obtained his first credit card. Did I mention how furious I was? How could a financial institution give credit a card to an unemployed teenager? Well, it happens all the time and I saw many of my sons friends up to their eyeballs in credit card debt before they graduated from college. Financial literacy for Kids is so important, and is something that needs to be taught to our kids at a very young age.
It can be as simple as giving your child an allowance, and teaching them to budget that money for things that they want like candy from the grocery store. Don’t forget the importance of a strong work ethic when doling out their allowance. Children need to learn the value of money, by doing chores and truly earning that allowance.
Never let them spend all their money. It’s important that they learn to budget, spend wisely, invest, save, and donate.
On the topic of saving money. It would be easy to teach our kids about saving by having them save for something they want, but if you think about it that’s not saving at all – just prolonged spending. Kids need to learn the importance of a rainy day fund and saving for emergencies that might happen down the road.
I remember how hard it was when I had to tell my young son that I couldn’t afford something he wanted. So innocently he would ask “Can’t you write a check for it?” or “Can’t you put it on your credit card?”. That was certainly a red flag that I was overdue on teaching him financial literacy.
Start when your kids are young. There are lot’s of fun ways to begin teaching young kids about money. Nick Junior has some fun online counting games, and there are many others available that can be found by a simple web search.
At what age did you teach your kids about money?
You might also be interested in The Best Places to Raise Your Kids 2012.
* Guest post by Genworth Financial.