April is National Financial Literacy Month and a good time to start teaching your children and teenagers about financial literacy and sound money management. According to the JumpStart Coalition, the average high-school graduate lacks basic skills in the management of personal financial affairs. Many are unable to balance a checkbook and most have little to no insight into the basic survival principles involved with earning, spending, saving and investing.
Because students most often cite their parents as their No. 1 source of financial knowledge, it’s time to think twice about what you are — and aren’t — teaching them. Before your young adult leaves home for college or joins the daily workforce, consider these tips to help improve your kid’s financial savvy.
Set a good example.
Young adults learn by watching what you do, so the more they see you practicing good money skills, the more they’ll learn.
Get them involved.
Allow them to participate in your everyday financial responsibilities, such as comparison shopping. Let them sit with you while you pay the bills, so they can see the totals of your monthly obligations, including utilities, phone bills, mortgage payments and insurance costs.
While you don’t have to disclose all of your financial information to your children, involve them with the family finances as much as you are comfortable. Hiding family financial limitations will only confuse your child as they face their own financial challenges later in life.
Teach them to use credit wisely.
Using credit can be a tremendous asset or a costly mistake. Explain the consequences of misusing credit. For example, if a student racks up a $1,000 credit-card bill their freshman year, and pays the minimum payment each month, they will finish their bachelor’s degree, complete their master’s program and still have three more years to go to pay off their spending spree.
Finally, keep an open line of communication with your child; you might be their only resource for financial advice and information.