Money skills for kids
Traits to instill in children to make them savvy consumers
Some financial literacy efforts in schools don’t pay off. Instead, we should be teaching kids the habits that make savvy consumers. These four skills make a difference regardless of someone’s circumstances or the economic climate: evaluating which might be best for their particular situation. The exercise gives students practice in comparison shopping, but also gives them a handy rule of thumb for other decisions. Skepticism Smart consumers need to think critically about the advertising, offers and advice that bombard them every day. Look beyond surfaces to determine what’s really being sold to you, and why. “We need to ask, ‘What is the motivation of the entity that’s giving me this information?”’ says Josh Golin, executive director of the advocacy group Campaign for a Commercial-Free Childhood. Healthy skepticism can be taught in an age-appropriate way that helps young people feel empowered rather than paralyzed.
Discernment Research and comparison shopping are skills like any other that need to be learned, says financial literacy expert and Rutgers University professor Barbara O’Neill. O’Neill emphasizes the “rule of three” in her financial literacy courses. O’Neill has students research three credit card offers, for example, comparing the interest rates, penalty rates, fees and rewards for each, and
Planning People who plan ahead for large, irregular expenses are 10 times as likely to be financially healthy as those who don’t, according to a 2015 study by the Center for Financial Services Innovation, a nonprofit that promotes financial health. Financial literacy education often focuses on goal-based planning, such as budgeting for retirement or a down payment, or saving a set amount for emergencies. That’s important, but perhaps not as relevant to early-stage workers as building financial flexibility into their lives, says John Thompson, CFSI chief program officer. “You want to make sure you have access to the tools and products you need before a problem presents itself,” Thompson says.
Saving A regular savings habit is also associated with financial health, the CFSI study found. The act of saving is more important than the amounts. “A few hundred dollars can really make a difference,” Thompson says.