The modern American family lives at the speed of light these days, barely stopping to recharge their smartphones and fill their backpacks before rushing out the door. With many families having two working parents, time is precious, and it’s fairly easy for money to slide to the educational back burner. Don’t let this happen! Your kids need to learn about money now, before it’s too late, to ensure they’re going to have a bright future.
1) Learning about money now makes moving on to more complex financial concepts later easier.
Many tasks or concepts in finance require abstract logic or reasoning to complete and understand. For example, something as simple as using a credit card relies on the concept that the card represents, but is not actually, money. To get these concepts, your child has to grasp basics like the value of physical money and how to save first.
2) Your child needs to use money skills sooner than you might think.
Schools usually don’t teach finance-related courses until middle or high school, and many parents associate children leaving for college as the time when money skills really become vital. In reality, though, kids need money skills almost as soon as they can count. For example, even kindergarteners might have to give the lunch lady at school their lunch money and get change. They will see and ask for things in the store at a very early age, and even if you give them their own money, they can’t use it on their own to make a purchase unless they know how the money works.
3) Teaching your kids about money now provides an environment of inclusion and understanding.
Inevitably, your kids will see you handling money in one way or another, whether it is via a trip to the grocery store or balancing your bank statement online. Your kids will ask questions about what you are doing, and better yet, they’ll want to do what mommy and daddy do. If you teach your child what you’re doing, they’ll feel included instead of little, capable instead of frustrated. They’ll understand why you are performing the tasks you are, which will make them feel more secure.
4) Inflation is real.
Whether you like it or not, inflation is a fact of life. Basic things like rent and food will cost more for your children than they cost for you—experts routinely point out the rising cost of education as they emphasize budgeting and saving options. To be prepared to handle these higher costs later, your child needs to work, save and invest well, and getting a solid foundation for those tasks doesn’t happen overnight.
5) Poverty is a cycle that only stops with planning and effort.
As of 2012, the American economy is still shaky, recovering slowly from the Great Recession. Reports from the United States Census Bureau showed that roughly 1 out of 6 Americans (46.2 million) were in poverty as of September 2011, as reported by Hope Yen of Bloomberg Businessweek. Opportunities still exist, certainly, but with more children born into or currently living in poor financial situations, more children will have to work harder and be more frugal to reach their dreams. Solid financial education can put your child in a better position to compete.