Expert Urges North Carolina Parents to Prioritize Financial Literacy Education for Kids This Summer

Taking proactive steps to tackle the financial literacy crisis begins at home, especially considering that financial education courses remain inconsistent in schools nationwide.

However, a study by T. Rowe Price reveals that many parents feel reluctant to discuss finances with their children. This reluctance, shared by 36% of parents who are “very” or “extremely” hesitant and 26% who are “somewhat” reluctant, contributes to a lack of financial understanding among today’s youth.

Despite this hesitation, initiating conversations about money at home is crucial. Here’s a basic guide outlining financial concepts for various age groups:

Ages 3-5:

• Introduce the concept of money and its various forms, such as coins, dollar bills, and cards.
• Teach that money is earned through work and discuss different professions.
• Explain the concept of delayed gratification by discussing the need to wait before making a purchase.

Ages 6-10:

• Differentiate between wants and needs, discussing essential expenses versus discretionary spending.
• Highlight the importance of making choices with money, emphasizing trade-offs and budgeting.
• Introduce the idea of comparing prices and exploring different purchasing options.

Ages 11-13:

• Encourage the habit of saving by setting aside a portion of earnings.
• Explain the concept of credit cards as a form of borrowing and the importance of responsible use.

Ages 14-18:

• Discuss the pitfalls of credit card debt and the importance of paying off balances.
• Introduce the concept of taxes and the necessity of contributing to public services.
• Stress the significance of building an emergency fund and basic investing principles.

In addition to these guidelines, parents can:

• Provide real-life examples of financial decision-making.
• Utilize allowances to teach money management skills.
• Allow children to experience failure and learn from mistakes.
• Initiate “real-world” training by gradually transferring financial responsibility to teenagers.

By instilling financial literacy early on, parents empower their children to make informed financial decisions, setting them on a path towards financial stability and responsible citizenship.