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

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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.