Financial Literacy for Children

Financial Literacy for Children

Sep 21, 2017

When is it a good time to start teaching children about the value of money? It may be younger than you think!

iStock-173545557.jpgAs early as grade school, children can learn to save simply by setting aside a little of everything they receive from events like birthdays, Christmas, allowance, or odd jobs. Many reasons can be given as to why they should do this, including to save for something they want, and possibly college.

As they get older, more complicated aspects can be added, like budgeting. For the last five years, I have volunteered on behalf of Western Fraternal Life at a program put on by the local community college for all eighth graders in the county. All schools have basic budgeting lessons for the eighth graders that culminates in a trip to the community college to experience real life situations.

The students pick a profession they may want to pursue and the schools give them an annual salary they can expect to earn when entering the workforce. If the profession requires additional education, the students are also given student loan amounts for the amount of education required. Students are also asked to set aside at least 10% of their monthly salary for savings. When they arrive at the community college, they now have a monthly amount of disposable income. The key to this step is that they have set aside money for savings before they get to their everyday living costs.

My point is that kids get it — or can get it, if their parents take the time to help them understand.

Each student goes through a series of stations where volunteer advisers help them pick out affordable housing and transportation, auto/home insurance, utilities, vacations, entertainment, clothing, food, and unexpected expenses. After completing all stations, students sit down and subtract all of the expenses from their disposable income. This leaves them either a plus number, which means they have spent less than their disposable income, or a negative number, which means they have spent more than the disposable income.

The last step in the process is to sit down with one last adviser to review their choices. I have done this several times and a vast majority know more than you may think about how a budget works. Some automatically increase the savings amount when they have excess disposable income. Some volunteer that they cannot afford a new Mustang right out of college and they would get a used Escort instead. Others made arrangements with friends to share an apartment instead of having their own place. And some even say they are going to take public transportation until they can afford their own car. My point is that in as early as eighth grade, kids get it – or can get it if their parents take the time to help them understand.

So, when is it a good time to teach children about the value of money? Judge for yourself, but don’t sell your child short. They may get it earlier than you think.

Category: Financial

Donald M. Nieland


Vice President, Information Technology and Secretary

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