‘Teaching kids financial literacy is like handing them a compass for life, said Connor Boyack, author and founder of Libertas Network.
Among the many things parents can teach their children, financial literacy is proving to be an essential skill, experts say.
A Feb. 24
survey from Bankrate reveals that children who are raised with a strong financial education have a higher chance of developing the habits that will get them higher pay, better credit, stronger negotiating skills, and better saving habits for their future.
“You’re more likely to see success later in life if you have exposure to financial literacy earlier in your life,” Bankrate data analyst Alex Gailey told The Epoch Times. “That’s not to say that people who don’t have that exposure are doomed. It’s never too late to start learning.”
But an early education in financial responsibility is proving to pay off in adulthood.
According to the survey, Americans who grew up with a strong financial education were 1.5 times more likely to successfully negotiate pay raises. Of those surveyed, 66 percent who were raised financially literate said they had done so, versus 39 percent of those who were not raised with a financial education.
In addition, 49 percent of those raised with a strong financial education set budgets for their personal spending and 57 percent saved money for the future, compared with 32 percent of those who were not raised with financial literacy who set budgets and 43 percent who saved for the future.
Overall, 50 percent of men say they were raised financially literate, compared with 42 percent of women, the survey found.
“Teaching kids financial literacy is like handing them a compass for life,” Connor Boyack author and founder of Libertas Network, a family-focused advocacy group, told The Epoch Times. “It’s not just about money. It’s about understanding trade-offs, delayed gratification, and personal responsibility.”
Boyack has created a book series called the “Tuttle Twins” to educate children on money matters, including more complex concepts such as inflation and investing.
“We’ve seen kids as young as five grasp these ideas through stories,” Boyack said, “and it sets them up to thrive in a world where financial decisions shape their freedom.”
Other elements of financial literacy include working a pay-earning job, earning an allowance for doing chores, learning about personal finance in school, investing in stocks and bonds, managing a bank account, budgeting for a large future expense, paying off debt with their own money, or just talking with their parents about money, Bankrate states.
Financial literacy can also help kids avoid pitfalls later in life, like running up credit card
debt, which often charge interest rates above 20 percent, or taking out payday loans, which can
charge as much as 400 percent. In addition, developing the habit of paying bills on time leads to higher credit scores, which allows people to get mortgages and car loans at cheaper rates, and even pay lower
rates on car insurance.
“Because financial literacy isn’t consistently taught in schools, it’s important for parents to talk to their children about money from an early age,” Gailey said.
She suggests turning real life events into teachable moments, such as when kids are with you in the grocery store.
“Instead of your kids just tagging along and not paying attention to what you’re doing, take that moment to teach them about why you’re buying particular items, how they fit into your budget, or even giving them the task of choosing between two similar items and asking them questions on why they picked that,” Gailey said.
Other educational tools to teach financial literacy include a Ramsey Solutions
program called Smart Money Smart Kids, or Middle School MBA
run by John Rock Foster, as well as Junior Achievement programs.
“Even if you don’t use a company’s products, simply sitting down with your child to have frank, relevant discussions about money will make an impact,” Boyack said.
Many of the messages that young people have received recently do not teach them the value of personal responsibility, he said, such as recent federal efforts to cancel student loans.
“Student loan forgiveness teaches the opposite; that someone else will clean up your mess,” Boyack said. “Real responsibility comes from owning your choices, not passing the buck, and kids need to learn that lesson early, not unlearn it later.”
In addition to learning personal responsibility, understanding how to make good choices with money also seems to correlate with higher salaries as children grow up and start careers, Gailey said. Negotiation is not simply a matter of demanding more money, it’s also a matter of being able to assess your relative worth and to make a case to employers that they will benefit by hiring you or paying more to keep you on.
“When you have exposure to financial literacy at a younger age, you’re more likely to have more financial confidence later in life, and that can translate to more successful negotiation outcomes,” she said.
