Discussing finances with your kids can be challenging, but it’s essential to teach them financial literacy from a young age. According to a 2020 survey by Charles Schwab, 63% of people in the US consider financial literacy the most important supplemental skill kids can learn in school.
Money Scoop interviewed Gregg Murset, CEO of BusyKid—a financial services company focused on teaching kids vital financial skills—to share strategies for discussing money matters with your children.
Setting the Foundation for Financial Success
Murset emphasizes the importance of kids understanding the value of money early on because they’ll make financial decisions every day for the rest of their lives. Developing fundamental financial skills at a young age sets them up for success in the future.
Explaining Inflation to Kids
Inflation can be a difficult concept for children to grasp. Murset suggests using “gas and groceries” as examples. When you fill-up at the gas station, explain how gas prices have increased and how it impacts your family’s monthly budget. Use a similar approach when shopping for groceries. By incorporating these discussions into your daily routine, you can create meaningful learning experiences for your kids.
Teaching the Value of Money Through Chores
Murset believes that children learn best by doing. Assigning chores and allowing them to earn money helps them understand the effort it takes to earn money. Once they have money, let them use a debit card to make purchases and experience the direct impact of spending.
Introducing Credit Cards and Technology
When shopping with your kids, use the opportunity to explain the difference between a debit card and a credit card. Highlight that using a debit card withdraws money from your bank account immediately, while a credit card requires you to pay off charges at the end of the month. If not paid in full, interest will be charged on the remaining balance. This simple explanation can help them grasp the concept in a real-world setting.
Transparency for Financially Struggling Parents
For parents facing financial struggles, Murset recommends being transparent with your children about household expenses. Sharing the costs of bills, such as the electric bill, can help your children understand the financial responsibilities involved in running a household. This transparency can lead to increased empathy and understanding when discussing financial limitations with your kids.
By incorporating financial literacy lessons into everyday life, you can help your children develop essential money management skills that will benefit them throughout their lives.