The topic of money is a big one. Where do you start? How do you go about teaching it?
For the most part, all money education is focused on certain general topics:
- Earning money. This means putting in personal time and effort to receive payment.
- Saving money. This means setting aside money today so that it will be there in the future.
- Spending money. This means using money that's been earned or saved to pay for things.
- Borrowing money. This means using money that will have to be repaid in the future at more than what was originally received.
According to some child experts, a parent can start explaining about earning money, saving money, and spending money as soon as children can speak. Kids probably can't understand what borrowing is about until they're in elementary school and can appreciate what interest on borrowing really means.
Financial Building Blocks
According to a nationwide survey of high school students sponsored by Jump$tart Coalition for Personal Financial Literacy, almost 60 percent of the kids surveyed said that they learned about managing their money “at home from my family.” This compares with only 11 percent who said that they learned about money management at school.
Monkey Sees and Hears—and Monkey Does
By now, it's not news to you that your child picks up on just about everything you do and say. You're the main example of how to act. Whether consciously or unconsciously, your child will mimic your behavior.
When it comes to learning about money, how you act with it and what you say about it is perhaps the most influential thing you can do to instruct your child. This means that you should be sensitive to what you say and do about money matters; you're in a unique position to have a positive (or negative) influence on your child's ability to handle money.
Your actions and words about money should be consistent. If you say one thing but do another, your child will see through this hypocrisy very quickly. On the other hand, consistency will reinforce all your efforts; what you say will support what you do, and vice versa.