Hi. I’m Howard Pressman, a certified financial planner and partner with the Northern Virginia based wealth management firm, EBW.
April is Financial Literacy Month, a nationally recognized movement to promote and support financial understanding in children and teens.
For many, it's a fantastic opportunity to teach and connect with their children or grandchildren, and these kids are ready to learn! Recent data shows that nearly 74% of teens desire to be financially literate, and 86% want to learn how to invest.
Every parent has questioned if their child is actually paying attention. But rest assured, our children and grandchildren are listening and watching: 75% of teens in America identify their family as their most trusted source of financial education. In other words, our youngest savers and investors are looking to us for their financial education.2
So how do you start?
It all begins with a frank conversation regarding finances. By demonstrating your openness to discussing what many consider a "taboo" topic, you're also modeling how to approach finances for your young learner. In time, they'll learn to view financial issues and goals clearly with as little unnecessary stress as possible.
Here are some just a few easy suggestions to get you started based on your child’s age:
For the youngest ones, start with the basics
- What is money?
- Play store or restaurant with them and have them buy things from you
- Help them understand what things cost by taking them to the grocery store
- Help them understand what things are worth and to understand the difference between an item’s cost and worth
- Teach them about opportunity cost or the alternatives we give up when we make a decision
For early teens, teach them about savings and help them develop the habit of saving
- Teach them to pay themselves first by having them save some of their allowance or birthday money
- Make savings fun by having them save for something special or exciting like a fun memento on your next family vacation
- Incentivize your kids for saving, by sweetening the deal. Maybe buy them a game to go with the gaming console they saved for.
For older kids, teach them about credit and debt.
- Teach them about responsible use of credit such as for
- Buying assets that will increase in value over time such as a house
- To help finance an education
- To buy a reasonable car that helps someone get to their job
- Teach them about irresponsible use of credit such as
- Spending more than you make
- To purchase items that are not assets
- Teach them about interest and cost of financing
- And don’t forget to talk about credit cards and how easy it can be to get in over your head.
Financial literacy month has been shown to have a lasting, positive impact on our future investors. Children who are taught personal finance from a young age are more likely to secure lower-cost loans and grants when paying for college and less likely to rely on private loans or high-interest credit cards.
If you decide to put your "teacher" hat on this month, let us know! We're always happy to help educate and support our future generations.
If you have any questions, contact us at info@ebwllc.com or visit our website at EBWLLC.com for more financial tips you can use to share with your family for April’s Financial Literacy Month.
Howard Pressman, CFP® Financial Planner / Partner Egan, Berger & Weiner, LLC 1919 Gallows Road, Suite 600 Vienna, VA 22182 www.ebwllc.com
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