Only 17 states in the US require that students at public high schools take a personal finance class before they graduate.
“At the end of the day, kids are not being taught the fundamentals in school. As much as we think or hope they are, it’s not happening,” says Gregg Murset, certified financial planner and founder of MyJobChart.com, a free tool that teaches kids about money.
That means parents are the ones that have to assume responsibility — and the earlier you start teaching money basics, the better.
“Even if they have personal finance being taught in high school, that’s too late,” explains Murset. “They’re quasi-set in their ways by the time they’re 17, so you really have to start a lot earlier.”
Every kid learns at a different pace, but you can start laying the groundwork as early as five years old, Murset says.
Here are six money lessons you can introduce to your kids as early as kindergarten. The more interactive and fun you can make it, the more they will absorb, so we’ve also included strategies to help convey the basics suggested by Murset and Peggy Mangot, CEO of SparkGift, a new platform that helps parents teach kids to start investing early.
Of course, we can’t guarantee they will grow to be millionaires, but if you can hammer home these concepts from a young age, they will be ahead of the curve.
The earlier parents establish the concept of earning, the better, says Murset. Kids need to understand where money comes from, and that it requires a job and work ethic to get money in your wallet.
Strategy: Introduce the concept of an allowance, and give them specific jobs around the house that will earn them a bit of money each week.
Note that giving an allowance the wrong way -- not having discussions about how to use the money and simply handing over a certain amount each week -- can do more harm than good. Check out the most effective way to give your kids an allowance so they're actually learning about money.
Another option is to encourage them to participate in a bake sale or lemonade stand -- something that requires them to put in work in exchange for earnings.
The concept of debit and credit cards are more difficult than ever for kids to grasp, explains Murset: 'We used to be able to pull out our purse or wallet and there would be a wad of money. Now, it's always a card or phone -- something invisible -- which makes it even more difficult to teach kids about money.'
It's important for them to understand that the swipe of a card means money is being removed from an account, Murset says.
Strategy: When you're checking out at the store with your debit or credit card, let them help you enter your PIN number and use it as a chance to explain how the card works. You can also show them the different cards you have and explain how using one card -- the debit -- will take money out from an account right away, while the credit card will send a bill at the end of the month.
This may seem like a stretch, but Mangot has had success introducing her 6-year-old to the world of investing by letting him purchase stocks and follow the stock ticker. It's all about showing instead of telling, and keeping it fun and interesting, she tells us.
Strategy: Open an investment account for your kids and use the money that they have earned to buy stocks with them. 'If they actually have their own accounts, they can actually look at how the stock is doing, and how the value is going up or down,' she says.
They will get excited about this, especially if they have picked companies that interest them, like Disney or Nike. 'While a sound investment portfolio is well-diversified, getting your kids started by investing in companies that personally interest them will help keep them interested and motivated,' she explains.
Then, take advantage of the digital tools out there to keep them consistently engaged. Mangot uses the built in stock ticker on the iPhone to let her kids track the market, but there are other online tools that will link to investment accounts and let you track your portfolio, such as the Google Finance tracker and SigFig. Link your kids' accounts and they will be able to follow the market in real time and see the performance of their stocks.
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