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With living rooms taking the place of classrooms as learning continues online, many parents find themselves serving as a teacher now more than ever. An important topic to teach all children – and one that can often be overlooked – is financial literacy.
We asked Bob Juliano, Vice President and Director of Community Development at WSFS Bank and a financial education expert who has taught K-12 financial literacy to thousands of children, about the benefits of teaching children about money to help them build a solid foundation.
Why should parents start teaching children about money early?
It’s important to introduce the basic principles of financial literacy to children early because at a young age they are like sponges, absorbing information. It is never too early to equip children to make good financial decisions. Children have the capacity to understand right and wrong at an early age, and you want to reinforce good spending behaviors and nip bad behaviors before they even begin to form. Once children can understand basic principles of counting, you should begin teaching them about money. It’s important to teach them how to become savvy savers who spend wisely and understand that saving is continuous and valuable at every stage of life.
Through our partnership with area schools and EVERFI, we have taught thousands of children from grades K-12 about financial education, and, yes, the younger kids not only enjoy it but they get it.
What lessons should parents focus on?
Basic topics such as budgeting and planning, using allowance or any money earned doing chores, are great places to start. If a child wants a specific toy or game, use it as an opportunity to teach them how to save. These small measures are steppingstones to managing spending as they grow up. A good rule of thumb: When you’re young and don’t have all the responsibilities that life brings as you grow older, save at least half of what you earn. Then, use the remainder for spending on needs first and then wants. Due to the coronavirus, many online resources, such as EVERFI, have partnered with banks like WSFS to offer their online learning resources on several topics, including financial literacy, to students for free.
At a young age, earning and saving should be the focus, followed by the importance of budgeting and prioritizing spending. Teach the value of living within their means and understanding needs versus wants. Just because your friends have it doesn’t mean you need it. Talk to them about a financial plan for various stages of their life, such as saving for vacations or their own children’s education. Teach them the valid reasons to borrow, i.e., for life-improving events such as attending college, buying a home, a car, starting a business, saving for retirement and especially for a rainy day. Teach them what banks are, how they work and how you can use them to buy a home, open a business or save for the future.
How can parents bring financial lessons to life for children?
1. Give them a piggy bank right from the start and show them how to use it.
2. Introduce fun games that teach them about money and spending habits.
3. Take children to the grocery store and involve them in shopping by talking about the cost of items.
4. Give them an allowance for chores and teach them the value of it.
5. Take them to the bank once an allowance is introduced and open a savings account to begin teaching the value of saving.
6. Don’t be afraid to speak with your children about money and responsibilities, and sometimes issues that come along with it.
Any other tips for parents to instill solid financial habits in their children?
Let your children use you as an example for how to handle money. Don’t let them see you making bad decisions or spending unwisely. Teach them to be givers as well as savers. Why? This principle might be the most important of all, because those that are givers often receive the rewards of giving in many ways other than just financial gain.
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