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    Americans Say They’d Be More Financially Secure if Better Educated — 6 Ways To Start Early

    By Dawn Allcot,

    2 days ago
    https://img.particlenews.com/image.php?url=14xoxG_0uoT75mQ00
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    As of June 2024, 26 states require that students take a personal finance course before graduating from high school, according to Next Gen Personal Finance. This proves to be more financial education than past generations received. According to Intuit’s recent Financial Education study, 23% of U.S. adults said they did not receive any financial literacy education as children.

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    Many experts feel that financial education should begin well before high school. “I am an advocate of preparing students for the real world by teaching financial literacy in middle and high schools,” said Robert Johnson, PHd, CFA, CAIA and the Professor of Finance at Heider College of Business, Creighton University.

    “The earlier the better,” he added. “Teaching financial literacy in college is simply too late. By that time, many students have sealed their long-term fate by incurring burdensome student loans.”

    Today’s Gen Z and millennial cohorts agree that financial education should start early, according to the Intuit survey. Nearly three-quarters of Gen Z (72%) and millennials (75%) who didn’t receive a lot of financial literacy education as kids said they feel they would be better off today if they had. Overall, 66% of the population agreed that their financial security would be stronger today if they had been more educated about money matters as children.

    Some experts believe children can start learning about money as early as age three.

    “At this age, you can introduce basic concepts such as the difference between needs and wants, and the idea of saving. Simple activities like playing store games or using toy money can lay the groundwork for understanding financial concepts,” said Taylor Kovar, CFP, founder and CEO of 11 Financial.

    That puts financial literacy in the hands of parents, rather than public schools.

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    What Is Financial Literacy?

    Before we dive into ways to teach financial literacy, it helps to define the term.

    “Financial literacy refers to the active skillset and mental intelligence around earning, budgeting, spending and growing money,” said Funmi Soewu, CEO of Todlr, a financial literacy app for kids and their parents. “Kids already perceive the concept of money by age 4 just by observing what their parents do… A quick run to the grocery store can teach budgeting and understanding the difference between a need and a want.”

    “Money mindset starts at an early age,” agreed Ruchi Pinniger, founder and CEO of Watch Her Prosper. “Children watch, children listen, and children are wise. Ideally you can start teaching them as soon as possible. Starting at age two, you can create a safe money environment by starting them out with a piggy bank.”

    How can you prepare your children for a strong financial future, especially if you didn’t receive the best financial education growing up? Here are five easy ways to teach your children about money at any age.

    1. Use Play To Instill the Basics of How To Earn and Spend Money

    Whether you begin at age two when your toddler is just starting to communicate on a higher level and grasp basic concepts, or five years old when they enter school, use play to make personal finance concepts accessible and fun. “Get them excited about the basics of money,” Pinniger said. “Buy them their first piggy bank and show them the thrill of dropping in coins and beginning to save. Encourage play! Using lemonade stands, toy money, and cash registers, you can help your child feel more comfortable and curious about how money works.”

    Kovar agreed, “Use toy money to teach the basics of exchange and the concept of trading goods for money.”

    2. Provide an Allowance

    Johnson said he believes in teaching children financial concepts using real money. This may require an allowance from parents. “The best lessons are those taught with real money,” he said. “And, the advantage of doing this with kids is that the stakes can be extremely low. Better to learn hard lessons by making mistakes with a small amount of money than with a large amount later in life.”

    Kovar suggested using saving and spending jars that children can use to categorize their money for different purposes, such as saving for a toy or donating to charity.

    3. Teach the Difference Between Saving and Investing

    Johnson said, “I would contend that kids should be taught to invest, not save, to help them on a path to financial security.”

    Once the child is a little older and has some awareness of the world around them, you can use real money to teach low stakes investing. Today’s platforms like Acorns and Robinhood permit investors to buy fractional shares of blue-chip stocks, creating a low-risk environment to teach younger generations about investing.

    “A good way to start is to open an account in the name of the child and have that child select stocks of companies that they know — like Disney, Apple, Nike or Starbucks. Then, have the child monitor the value of these companies, adding to positions with a portion of allowance money, birthday money, etc. A good method is to provide the child with an allowance and mandate that a percentage of that allowance be invested when received,” Johnson noted.

    4. Model Delayed Gratification

    “The idea of saving or investing is a choice between current consumption and future consumption,” Johnson said. “It is very difficult for many people to imagine their future self and give up current consumption in lieu of having money to retire on in the distant future… Teaching children the basic lesson that passing up current consumption for greater future consumption can powerfully change the way people look at life.”

    5. Teach the Basics of Budgeting

    Kovar agreed that learning how to save and invest is a crucial aspect of financial literacy. He advocated for teaching the 50/30/20 rule of budgeting , where 50% of your money should go toward needs, 30% toward wants or non-essential items, and 20% into savings and investments. Even very young children can grasp these basics. “As they grow, involve them in family budgeting tasks or let them manage a small allowance to help them grasp how to allocate and manage money,” Kovar said.

    6. Teach Real-World Skills

    With a solid foundation in place, tweens and young teens should be old enough to manage a bank account and debit card. “This can help them learn about bank transactions, budgeting and responsible use of financial tools under parental guidance,” Kovar said. “Provide them with opportunities to manage their own checking accounts or prepaid debit cards. Teach them about investing basics, credit scores, and how to make informed financial decisions regarding education, cars or part-time work.”

    This article originally appeared on GOBankingRates.com : Americans Say They’d Be More Financially Secure if Better Educated — 6 Ways To Start Early

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