What should be your child’s first lesson about Financial Literacy (money management)?

Question  What should be your child’s first lesson about Financial Literacy (money management)?

Answer  How to save money.

Complete Answer  A basic assumption of Financial Literacy (money management) is “Don’t buy stuff if you don’t have the money to pay for it”. Most children know that instinctively. Unfortunately some adults who find themselves in financial difficulty seemed to have forgotten that basic assumption of Financial Literacy.

A child’s first lesson in Financial Literacy is how to save money. It’s called “Pay Yourself First” (PYF Savings). Every time a child has money to spend, a birthday gift, money earned for raking a neighbor’s yard, et cetera, 10% should be saved. This should be automatic and nonnegotiable.

Although these concepts are beyond the understanding of a child, in the future the PYF Saving account could be used as a rainy-day fund, a child’s personal bank to borrow money from, and eventually a retirement account.

Financial Literacy Knowledge/Skill

Teach your child how to save money using the concept of  “Pay Yourself First”.

Comments or Questions

Thank you for visiting the Financial Literacy a Life Skill site. Please feel free to submit comments and/or questions you may have about managing your money (Financial Literacy).

 

When should you teach your child(ren) about money?

Question  When should you teach your child(ren) about money?

Answer  When a child is given the opportunity to make a financial decision.

Complete Answer  It is never too early to teach your child how to handle money (Financial Literacy).  The best time to talk to your child about handling money is when they are given the opportunity to make a financial decision.

Please Note: A financial decision is made up of two parts;
1. the decision to spend or not spend money and
2. what will be purchased.

Your feelings of apprehension are normal and are similar to the feelings you had when your child first rode a two-wheel bicycle without you jogging beside them. I can assure you of two things, 1. they will make mistakes 2. but they will make fewer mistakes because you shared with them your experience and knowledge of handling money (Financial Literacy).

Financial Literacy Knowledge/Skill

You should teach your child(ren) how to handle money (Financial Literacy) when they are given the opportunity to make a financial decision – to spend or not spend and what will be purchased.

Comments or Questions

Thank you for visiting the Financial Literacy Life Skill site. Please feel free to submit comments and/or questions you may have about managing your money (Financial Literacy).

Next week’s topic: What should be your child’s first lesson about Financial Literacy (money management)? 

Should you teach your child(ren) about money?

Question Should you teach your child(ren) about money?

Answer Yes.

Complete Answer  “Give me a fish and I can live for a day, teach me to fish and I can live for a lifetime”. Consistent with that theme and as your child’s first teacher, one of the most valuable lessons you could teach your child is how to manage their money – Financial Literacy. My parents used the expression, “How to stand on your own two feet”. Additionally, our children learn from seeing what we do.

There is a reluctance to talk about finances, especially with our children. “People would rather talk about their sex lives than their finances.”17 As difficult and awkward that may be, Financial Literacy it is one of the most valuable lessons a parent could give a child.

The “when” and “what” talks about finances will be covered in coming posts.

Financial Literacy Knowledge/Skill

Teach your child(ren) how to manage their money – Financial Literacy.

Comments or Questions

Thank you for visiting the Financial Literacy Life Skill site. Please feel free to submit comments and/or questions you may have about managing your money (Financial Literacy).

Next week’s topic: When should you teach your child(ren) about money?