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More than nine out of ten parents believe it is important for students to learn about personal finance in school, and three out of four think there should be a finance requirement to graduate from high school. Even so, 72% express at least some reluctance when it comes to talking about finances at home.(1)

Certainly, learning about finance in school is important, but there are limitations. Forty-seven states include personal finance in their standards for K–12 education. Every state includes economics. However, state standards do not necessarily translate into class offerings or individual requirements.
Teach Your Kids About Money

Moreover, a new academic study of state programs suggests that financial education in school may not correlate directly with financial success. On the other hand, students who take more mathematics courses do seem to be more successful financially after they graduate. To put it simply, understanding financial concepts may not be that helpful unless you can do the math.(2)

1. Start with Saving.

Opening a savings account not only may help your child learn to save but also can be an introduction to banking. (Some banks allow teens to access their accounts through mobile apps.) Talk about saving for goals that require a financial commitment, such as a bike, car, college, and travel. Consider matching the funds your child saves for a worthy purpose.

2. Practice Budgeting.

If your child has income from an allowance or a job, help him or her develop and follow a budget. Teach your kids about money by giving older children responsibility to buy items such as special clothing and luxury items. It’s better to learn the consequences of overspending now than later in life.

3. Illustrate Interest.

Even young children can understand the idea of borrowing and returning the borrowed item. When children understand fractions and percents, it’s time to explain interest. Offer real-world examples, such as an auto loan or home mortgage. Teach your kids about money by using an online calculator and showing them how a payment schedule works.

4. Introduce Nest-Egg Dollars.

Your kids probably hear about the stock market, but even older teens may not understand what it is. Explain the concept of buying stock in a company and the idea of risk and reward. Teach your kids about money by using board games that can help bring learning to life.

5. Open Up.

You don’t want to worry your children. But research suggests that it’s better to discuss money on a practical level than to keep them completely in the dark(3). You might use a real-life situation to teach your kids about money. For example, you can teach about the decision to buy one product versus another. And, you can teach on the commitment to save for retirement.

Teach Your Kids About Money

Although it’s important to educate your children about financial matters, don’t overemphasize the importance of money. Explain that managing money is a necessary skill, but — as the saying goes — money can’t buy happiness.

Sources:
1) Forbes.com, June 8, 2015
2–3) The Wall Street Journal, February 2, 2015