When should we start teaching young people about money? I’m talking about more than identifying quarters, nickels and dimes. Would you be surprised to learn that there are things you can do with preschoolers that can help them learn skills to make wise decisions later in life?
There are key financial milestones that children can achieve throughout their childhood if we as parents and caregivers take the time to teach the lessons. Here are some milestones that young people can reach at different stages of development.
Young preschoolers (3-5 years old) can begin to develop skills to help them with future financial decisions, although we can’t connect these dots right away. A skill is the perseverance to keep going even if it’s not easy. It can be tempting for parents to step in and facilitate tasks or circumstances for our children. Enabling them to persevere in the face of adversity is essential to their development. Another skill is the ability to recognize trade-offs when it comes to things close to their hearts like time, money, treats, or belongings.
From your actions, young children often draw their own conclusions – and they do not always correspond to your intentions. The Consumer Finance Protection Bureau (CFPB) has this tip for parents. Think out loud. Some people do it more naturally than others. As you speak the thoughts you are processing, you clarify what you are doing and why. Try to get into the habit of thinking out loud during your day-to-day money and time management, so your kids can keep up.
As children grow through school age and into the pre-teens, they may develop skills more specific to money management. One skill we can influence as parents is a positive attitude toward thrift, frugality, and self-control. At this age, they can plan ahead and save for what they want. They can also make financial choices that align with their own goals and values. These things take intentionality on our part to have conversations with our children about possible goals and choices about the steps to get there.
A practical activity is to create a budget for your next celebration, such as a picnic or a birthday party. Create the list with your children and get their opinion on food, drinks, decorations and games. Then talk about how much they think these things will cost. Buy these items together and see what decisions need to be made to stick to the spending plan you created.
As young people reach middle and high school age, these are excellent years to cover specific topics such as paying for college or technical school, how to use credit cards wisely, and exploring services. banks or credit unions. One of the reasons why adults avoid these conversations is the lack of confidence in our own knowledge on these subjects.
There are some very helpful resources to guide these discussions and activities at consumerfinance.gov/consumer-tools/money-as-you-grow. There are sections divided by age groups and they contain lessons on earning, saving, planning, buying, borrowing and protecting money.
The CFPB offers this advice: “When talking to your kids about money, when you talk to them is less important than how you talk to them. When you consider where your children are in their financial development, you can tell them about important events and develop skills they will use later in life.
Today, I leave you with this quote from Edmund Burke: “If we command our wealth, we will be rich and free; if our wealth commands us, we are truly poor.
Emily Marrison is an OSU Extension Family & Consumer Sciences Educator and can be reached at 740-622-2265.