Last month, Florida became the eleventh and largest state in the country to mandate a financial literacy course for high school students. While this is encouraging news, hundreds of thousands of high school students in the remaining 39 states across the country are not being taught basic personal finance skills, such as balancing a checkbook.
According to a recent OnePoll study of 2,000 American parents with children between ages 8 and 14, “83% of them would have liked to learn more about finances growing up.” This revelation brings up a concerning question: Are we providing the necessary support and education to younger generations on financial literacy?
April is Financial Literacy Month, and Southwestern Investment Group provides some useful tips to empower younger individuals to become more familiar with financial responsibility.
Starting Healthy Habits Early
Instilling responsible money habits from a young age opens paths for long term financial success. Some immediate actions to take include:
- Open a savings account: Opening a savings account for your child at a young age is a great way to educate them about the value of money and provides them with a sense of responsibility and satisfaction as they see their funds accumulate.
- Align? Give a weekly or monthly allowance: Many times, one cannot find a part time job until at least the age of 14, but assigning basic chores around the house to earn an allowance helps to teach children the concept of earning. Allowances also help children understand how to budget money in the simplest of terms.
Teens – Taking the Next Step
Once a child becomes a teen, you can slowly start to incorporate more complex financial practices. Educating them on things like saving for retirement may seem a bit premature, but per Greenlight, 46% of teens don’t know what a 401(k) is. You can start by teaching them the power of compounding, putting money to work, and the consequences of debt.
Be Open to Conversation
In the same OnePoll study, research shows that 59% of parents are uncomfortable talking to their kids about money. This could be in large part that parents themselves don’t feel they’re equipped with the knowledge to do so. Encourage questions and an open dialogue when it comes to money.
Have them speak with a Financial Advisor
Helping your children understand finances is a daunting, but important part of parenthood. For additional tips on how to help a teenager build a financial foundation, reach out to an advisor at Southwestern Investment Group. We’re here to help answer your questions so that you can feel empowered to pass on your financial wisdom to the next generation.
