I have two daughters who, as bright as they are, tend to turn off when it comes to finance and investing.
Financial literacy was never offered in their school, which may be one reason why they don’t value the subject.
Yet, becoming financially literate is powerful. It can help young people make smarter choices, avoid getting led astray or scammed, and ultimately lead to greater security and freedom. And, while there have been recent efforts to teach financial literacy in several states, most notably in Oklahoma, it’s still largely up to parents to get kids started on the right path.
I haven’t given up trying to teach my girls in hopes they’ll avoid the school of “hard knocks” when it comes to finances. After all, ignorance in money matters has scary consequences. According to a recent study, only one in 10 teens can solve more than the simplest financial tasks. Nearly 25% of teens erroneously think their college debt will be forgiven when they graduate. And, according to the New York Times, only 43% of workers under age 25 take advantage of retirement accounts at work.
If you’re like me and want to help your kids become smarter about money, check out the following resources. Broken down by age level, these tools, videos, and tips can do a great deal to fill in where formal education often comes up short.
For All Ages
Money As You Grow, subtitled “20 Things Kids Need to Know to Live Financially Smart Lives” is a terrific, practical site with age-appropriate activities and links, for ages 3 to 18. For example, in the section for children ages 11 to 13, one milestone is: “The sooner you save, the faster your money can grow.” The site illustrates this with a great point:
Show your child the following: If he sets aside $100 every year starting at age 14, he’d have about $23,000 at age 65. However, if he begins saving at age 35 he’d have about $7,000 at age 65. Assume the account earns 5% every year.
Quite a difference! To further understand and play around with the power of compound interest over time, the site links to a handy calculator.
For Preschool to Elementary School Students
Reports suggest children as young as three can grasp financial concepts like saving and spending and that kids’ money habits are formed as young as age 7.
From giving an allowance to talking about credit, Learning Liftoff compiled six tips to start teaching kids about money from an early age (with some games and activities to help, too).
For Elementary to Middle School Students
- Money Confident Kids from T. Rowe Price: Engage your children ages 8 and up with The Great Piggy Bank Adventure, created for the site’s sponsor by Disney. It’s an animated board game with cool graphics and gives kids a mix of challenges that have to do with making sound financial choices. A short video provides an overview. There are also mini-games that are fun, though less educational.
- For kids 9 – 12, the Warren Buffett’s “Secret Millionaire’s Club” is well worth visiting. A cartoon character based on the famous and friendly billionaire stars along with three kids in 26 short, engaging webisodes (3 to 4 minutes each). They include simplified topics on how to save, making smart choices, running a small business, and more. For example, Lawn and Order tells about a friend of the Club, named Zoe, who rakes leaves and cleans yards for money but isn’t saving anything to buy a lawn mower, which would help her make even more. Mr. Buffett explains the idea of saving part of every yard work fee, so Zoe can invest in her business. The Lawn and Order Activity Sheet suggests that your children use two money jars, one for saving and the other for spending. (You might consider a third jar for charity.) Also, it has kids make a list of five to 10 things they’d like to get and mark each item as either a “want” or a “need.” Next, they’re asked to put the items in priority order, and make decisions about saving for their goals.
- The Mint.org: Sponsored by Northwestern Mutual and launched in 1997, the site has won kudos from the American Library Association as a Great Site for Kids. It’s chockfull of good, basic information and probably best for middle school and higher. And it doesn’t forget parents, with plenty of guidance for how to deal with your kids and money, like this solid advice about giving allowance.
For High School and College Students
- The world of online learning has opened up new options for gaining financial literacy. For motivated students, there are now semester-long high school courses that can be taken for credit. Several excellent options in this category, with teacher support, are offered by the online leader, K12, including Introduction to Entrepreneurship, Personal Finance, Economics, Family and Consumer Science, and Accounting.
- Better Money Habits: Put together by Bank of America and the Khan Academy. 68 short videos in three broad topic areas: Understanding Credit, Saving and Budgeting, and Home Buying. Intended to boost financial literacy, mainly for young adults, but with a number of topics that will help your high school student think ahead, such as this video on “How to Set a Budget and Stick to It.” (This link plays the video directly from YouTube, which worked better for me than playing videos on their website.)
- Finally, for a graduating high school or college student, there’s William J. Bernstein’s booklet, “If You Can: How Millennials Can Get Rich Slowly.” Here are 27 pages of simple wisdom. This financial advisor boils down the entire challenge of saving and investing to a plan that “will take you fifteen minutes of work per year, outperform 90% of finance professionals in the long run, and make you a millionaire over time.” It’s available as a 99 cent download for Amazon Kindle or a Kindle app. It’s also available as an inexpensive paper pamphlet. Might be the least expensive, but best graduation gift you can give!
So, those are some ways to help your kids get financially literate. And hey, you might pick up a good idea or two yourself!