By Charlestien Harris, Retired Financial Counselor at Southern Bancorp
Financial literacy is a critical skill that benefits every member of the family, regardless of age. For many parents, setting a good example and providing the tools and knowledge children need to become financially successful throughout their lives is essential. For children, it’s about learning how to manage money responsibly and preparing for a financially sound future.
Charlestien Harris
Teaching your children about money and how to manage it is a task many parents want to take on, but may not know where to begin. The tips in this article are designed to help both parents and children take steps toward becoming more financially literate, ultimately benefiting the entire family.
Tips for Parents
Explain the value of money and where it comes from. As a parent, you understand that money brings both freedom and responsibility. Teaching kids the value of earning money is an important first step in financial literacy. Providing a regular allowance for completing chores can help children develop a strong work ethic and begin to understand how to make choices about spending and saving.
Start teaching early. Introduce basic financial concepts to your children at a young age. The earlier you start, the greater the impact the information will have on their future. Teaching children how to spend money efficiently is a key component of financial literacy. By learning to allocate funds for various needs, kids begin to understand the importance of separating finances for specific purposes. Simple activities, like saving coins in a piggy bank, can make a big difference. Learning to save early helps children develop long-term habits that carry into adulthood.
Lead by example. Sometimes, we forget that our children are always watching us. The old adage, “Do as I say, not as I do,” can hinder the learning process. Demonstrating how you budget, save, and spend wisely is a powerful way to teach financial principles. Take your children to the bank to open an account, explain how accounts work, and introduce concepts like interest rates and secure savings. Your actions often speak louder than your words.
Use available resources. Take advantage of financial literacy resources available online, in books, or through apps to enhance your knowledge and pass it on to your kids. Storybooks, interactive websites, apps, and board games can make learning about money engaging and fun. Be sure to check the credibility of the information you share. As a parent, it’s important to provide accurate guidance so your children can develop healthy financial habits.
Share age-appropriate information. Early credit education helps children approach borrowing responsibly as they grow older. For teens, explain the basics of credit and debt, the importance of a good credit score, and the risks of consumer debt. When appropriate, introduce simple concepts of investing, such as stocks, bonds, and mutual funds. Understanding these ideas can help your child prepare for future financial needs, including retirement.
Tips for Students
Understand the difference between needs and wants. This is a crucial first step. A need is something required for survival, while a want is something that improves quality of life but isn’t essential. Learning this distinction helps build a solid foundation for financial decision-making.
Set financial goals. Goal-setting is essential for financial success. Start by understanding how much money you have and what your expenses are. Clear goals can motivate you to save and spend wisely.
Use technology to your advantage. Budgeting apps and online banking tools can help you track your finances. Many apps are age-appropriate and customizable to your situation. Video games and online programs can also teach financial principles in a fun, interactive way.
Track your spending habits. Keep a journal of your spending and have open conversations with your parents about money, income, expenses, and financial goals. Normalizing these discussions builds understanding and confidence.
Active parental involvement – through modeling behaviors and having open discussions about money – significantly influences children’s financial literacy and future decision-making. Developing financial literacy skills helps individuals build a secure future, avoid financial pitfalls, and achieve their financial goals. Creating and sticking to a budget is a fundamental aspect of financial literacy, and passing down this knowledge increases the chances of building generational wealth.
For more information on this and other financial topics, you can email me at charlestienharris77@gmail.com or write to P.O. Box 1825, Clarksdale, MS 38614.
Until next week – stay financially fit!
Charlestien Harris is our financial contributor, a retired financial expert with Southern Bancorp Community Partners.
