Money skills and habits are greatly influenced by the behavior and values of parents and caregivers. It’s important for youth to learn and practice money skills while young. This allows youth to learn from their mistakes while the risks are low.
Skills like setting a goal, prioritizing needs vs wants, setting up a savings and spending plan, researching facts and following through help children achieve financial well-being in adulthood. These skills are a foundation for deliberate financial decision-making.
Essential money skills:
- Understanding money concepts like savings, taxes, bank statements, bills, credit
- Identifying reliable information resources and where to go for answers/assistance
- Spending & saving based on goals & values
- Being positive about saving, planning, being frugal, and having self control
- Planning ahead & identifiying needs vs wants
- Focusing on the future through learning about investments
Ways to know if your child is on track:
- Make age appropriate achievable goals
- Take steps to reach a goal, whether or not they achieve it
- Resist purchases that don’t help them reach their goals
- Ask questions to understand money
Parents and caregivers may need to assist when children:
- Give up on a goal or a financial concept seems too hard
- Make choices that do not meet their original goal
- Use unreliable or incomplete information to make decisions
Children learn by watching how you handle money and the choices you make.
When children are young start the conversation about what and how you are making financial decisions. For example, while grocery shopping, talk out loud about which brand you are choosing, why, comparing the costs, determining the unit price, making lists and staying within your budgeted amount.
All these skills adults do regularly, but if we do it out loud with our children, they will better understand the why behind the choices. This helps them when making their own money choices and sets that foundation for their future.