The Importance of Financial Education For Children

As parents, we want nothing more than to set our children up for a successful future. Like moral values and life lessons, financial education can pave the way for a successful future.

Why Talking Money With Kids Is Essential

It's surprising, but many parents rarely discuss finances with their kids. A 2022 study by CNBC + Acorns revealed:

Only 15% of parents talk about household finances weekly
31% never discuss finances with their kids

There are many reasons these conversations are not happening, but the most prevalent is that parents are not personally comfortable enough with money.

Teaching your children about money is crucial to their financial success and preparedness. Children who know about debt, interest, income, and credit from a younger age are less likely to have poor credit scores, default on loans, or live beyond their adult means.

6 Ways to Introduce Financial Concepts

Helping your child learn about finances from a young age sets them up for smart money management later.

Here are six simple ways to make these lessons engaging and practical, whether through everyday transactions or opening a first savings account.

Real-Life Transactions

This simple lesson can exemplify the value of a dollar.

Take your child to the grocery store, and let them pay in cash, count bills, check receipts, and understand change.

If you're budgeting, use this to discuss how grocery shopping fits into the household budget.

Learn Through Allowance

Giving your child an allowance can provide a simple lesson on income.

Have your child complete chores or other small tasks to earn an allowance. Pay per task or a set amount once all tasks are completed.

If tasks are not completed, don't pay your child for that particular task. If they go above and beyond, give them a few extra dollars as a bonus. This is an excellent way to show the correlation between working and earning money.

Savings & Banking 101

Want to teach your child about saving and banking? Start by visiting your local FSB Branch to help your child open their first youth savings account.

FSB is here to help them understand:

How a bank account works
The fun of seeing savings increase with each deposit
How to read and understand a bank statement

Smart Spending Habits

Encourage your child to pause and reflect before making a purchase. This can help them evaluate their actual wants, leading to smarter money choices.

Discuss Monthly Bills

Instead of making bills taboo, encourage your children to ask what each bill covers, how often you pay it, and why it’s a service you need.

These conversations can provide insights into bills that power everyday life (water, electricity, mortgage) and bills that are “extras” (streaming services, gym memberships).

Once they’re older, show them when and how you pay these bills. Discuss due dates, paying bills on time, and possible repercussions for not doing so.

The Credit Talk

Lack of awareness about credit often leads to poor financial habits. To break it down:

Discuss credit cards' purpose and risks
Introduce "buying on credit" with a simple activity
Consider providing a student credit card with a low limit for older kids, emphasizing responsible usage and repayment
- - Important Note: When the statement arrives, help them understand what they spent and how to pay their monthly bill to avoid excessive interest charges