Teach Your Children Well
According to the National Endowment for Financial Education® (NEFE®), there is plenty one can do to teach children financial skills early. This Colorado-based nonprofit foundation is dedicated to helping Americans understand and control their own finances. Their website is filled with valuable information on teaching kids the skills to help them learn with six general categories for kids to learn about. 1. Earning Money, 2. Setting Goals 3. Budgeting 4. Saving and Investing 5. Using Credit Wisely 6. Protecting what has been accumulated.
Simple steps are offered to help parents teach their kids about money. For example at age two to four years old, NEFE® says most children will be anxious to start saving coins in a container. CEO and president William L. Anthes, Ph.D recommends that parents only use a piggy bank if it is transparent. He advises choosing a clear jar or bottle because he says, “At four years old, a child can’t understand what he or she can’t see.”
Ideas are offered for establishing allowances for five to seven year olds, suggesting that considering the family’s circumstances first, the amount may correspond to a child’s age, offering for example, $6.00 per week for a six year old. Anthes said, “Be sure to present the money at the same time each week, and be willing to let the child use it without restriction. For example, a child may initially spend the entire allowance immediately after he or she receives it. Be ready to point out the mistake,” he added, “but don’t bail the child out. Allow him or her to learn from the decision.”
Anthes advises introducing your children to the concept of compound interest by showing them how much $50.00 can grow at various rates of interest, and then to do the same calculations on $100.00. He says, “When they learn about the potential of their money, children are inspired to save for the long term.”
Find out more at the NEFE® website at http://www.nefe.org/.