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How Parents Can Help Boost Kids’ Financial Literacy
April is Financial
Literacy Month, providing the perfect opportunity to
actively engage kids on the topic of money.
“Even young children
should learn about basic money concepts, like saving for a
goal and spending only what you can afford,” says Alison
Summerville, business administration executive and head of
Corporate Citizenship at Ally Financial. “Building an
understanding of basic money skills and good savings habits
at a young age can positively impact your children by giving
them a solid foundation that they can use to manage their
finances at every phase of their lives.”
This month and beyond,
consider the following lessons:
Money Basics
Conceptualizing how money
works can be challenging for kids, who may see you using
credit or debit cards, buying things online, and even
purchasing movies on televisions and mobile devices. Since
many consumers rarely use cash, children may not realize
when you are actually spending money.
Discuss the prices of
various products and services. Explain how money can be
spent only once, and that after buying something, a person
needs to earn more money in order to buy something else. To
teach this concept, play “grocery store” or other games that
involve buying and selling items. Take turns being the
cashier and the customer.
Start Saving
An allowance can be an
opportunity to teach kids how to save. Having “give,” “save”
and “spend” piggy banks is a simple but effective way to
illustrate the three main uses of money and teach them about
giving. Kids can practice math skills by tracking the amount
saved for future spending on the things they want.
To maximize the benefits
your child receives from saving money, you may want to
consider a Uniform Transfers to Minors Act (UTMA) or
custodial bank account. For example, those offered by Ally
Bank, Member FDIC, require no minimum balance to open, and
offer competitive interest rates and no monthly maintenance
fees. When opening such an account, take time to discuss
interest and other basic banking concepts.
Needs vs. Wants
Help your children learn
the difference between needs and wants. Explain how you have
to pay for needs like food, shelter and heat, before buying
items that you want, such as toys and electronics. Help your
children come up with a plan to save and spend their own
money that takes into account their needs and wants.
Helpful Resources
Turn to free resources
that your family can use to help teach kids financial
concepts. For example, Ally, a digital financial services
company, released “Planet Zeee and the Money Tree,” a book
for parents and educators that uses a fun and futuristic
story line to teach kids ages 6-10 basic financial literacy.
Parents can visit allywalletwise.com to download the book
and play “What’s Zeee Answer?” an interactive game where
players answer questions based on the concepts covered in
the book. Additional resources for all ages are also
available at fdic.gov/moneysmart.
This April, take the time
to plant the seeds of money mindfulness and boost your
children’s financial knowledge.
Courtesy StatePoint
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