Financial Literacy for Kids and Teens

Financial Literacy for Kids and Teens

Young and carefree.  Will they be like that forever?   Young souls or teeners, and there’s tweenies,  more often than not are excluded on topics of financial planning.  Financial planning is not an activity for the forties only.  Starting them young not only creates a financially  aware and literate mindset but a potential investor as well.

1. Orient the kids on the concept of money- its availability and value. When to start? – As soon as they know how to ask for money, or even before.
2.  Work out a spending plan with your kid.  The allowance should be enough to cover his expenses and at the same time provide leeway for unexpected purchases or events. I know of parents who give a certain amount of money that is untouchable unless emergency parameters are touched. Example:  Flood in school area stranded them and they need food and supplies or a transport strike disrupted his usual route causing additional fare expense.
3. Have a lifestyle spending plan for kids. Kids often are susceptible on enticing promotional activities be it online, print or TV.  They know the latest trends and gadgets. They also take for granted that malling comes with purchases and food binges.  Before going out of the house, discuss with your teener what they can buy and can’t. Latest fad magazines and comics or CD games and movies could eat up a lot on your budget. Schedule purchases or encourage them to save up from their allowance. Primary school age kids might need more emphasis on this since they are likely to cause tantrums and public display of frustration (pdf ) on parents. How many times have we seen a kid wailing his head off over a new toy?  Be specific on what and when can they purchase and how much is the limit. Authority and control are the key factors here.
4. Manage windfall money.  Cash gifts should go to savings. If something is needed, discuss with your child and guide him into determining if the item is a want or need. Sudden windfall of money can make whims into “needs”. Also in depositing these money into the bank, take your child with you and show him how much he has saved.  This will inspire him to save more.
5. Introduce the concept of investing as you go along his saving plan.  Find ways on how you can show your kids that money really do grow. Of course, it can only come if the parents themselves have been oriented or educated in investment options available for them.
6. It is always interesting to see how well our kids will turn out in the future.  As parents it is our responsibility to raise kids that are not only self sufficient but also productive and participating citizens of the country.  Money concepts and money management should have its roots at home.  That way we can leave a legacy of good stewardship for our family and society as well. And the cycle continues....  

JBD – 03182013