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Money and Children: Teaching by Age Groups

According to the Council for Economic Education (CEE), which promotes economic and financial education in the classroom, students who have taken a class in personal finance are more likely to engage in financially responsible behaviors such as saving, budgeting and investing.(1)

Parents can insulate their kids from some of the biggest money management mistakes and build their financial literacy by talking openly about the value of money and the benefits of good financial decision making.

To yield the biggest impact on kids’ money habits, however, the lessons imparted must be age-appropriate.

Elementary School: Saving by Example

Younger kids, for example, may not be ready for a lesson on compounded savings growth, but they can benefit greatly by watching their parents model good financial behavior. 

At this age, it’s important, too, to demonstrate the value of money and sound money management.

That’s best done by giving them a dollar to purchase something at the mall, a yard sale, or at the movies. Let them see what they can get for a buck.

Elementary school kids can also begin to set financial goals.

When they receive birthday money from Grandma, or an allowance, encourage them to save the cash for something bigger they really want.

Show them how to compare prices at the grocery store and explain how different brands

cost more for the same product.

Middle School and Money Management

As your children mature, you can start letting them experiment with the money they earn through babysitting, shoveling snow or an allowance.

Help them set up three accounts – one for their savings, one for spending money, and one (if you choose) for charity. And explain how interest works.

These are the years to help children establish good saving and spending habits, and help them manage impulse-buying control.

To help close the knowledge gap, continue to build financial literacy, and reinforce the lessons learned at home, look for activities or public events than help build money awareness.

High School Kids: Debt Awareness

High school and college-age kids are ready for more sophisticated lessons in money management. That includes debt. Many of the best and brightest graduates get themselves in financial hot water by spending money they don’t have and burying themselves in high interest credit card debt.

You can save your kids from a similar fate by explaining how interest rates work, and how those $300 designer sneakers cost much more if you pay with credit and make only the minimum monthly payments. By paying $30 per month on a credit card that charges 18 percent interest, for example, that $300 would take 11 months to pay off and cost an additional $27 in interest.

Now is also the time to impress upon young adults the benefits of good financial choices – and the cost of poor decision making. Banks and other lenders rely on credit scores, a number that reflects your debt-to-income ratio and repayment history, to determine whether to issue borrowers a credit card or loans for a car or home mortgage. They also use it to determine what interest rate they should charge. By making payments on time and keeping your debt to a minimum, consumers are far more likely to qualify for the most favorable, lowest interest loans. 

Finally, there’s nothing like a lesson in compounded growth to motivate your adult children to save for their future. Teaching kids to save is merely aimed at giving them the tools to become smart consumers, use debt wisely and put money away for their future.

1 MassMutual State of the American Family 2013 survey

Provided by Jordan Jones, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual)

© 2016 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001

FY1092 CRN201809-204872


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