Children are like sponges and are constantly taking in and storing information, according to Age of Montessori. They’re getting it from all around them: at home, at school, from their friends, their teachers, and especially from their parents.
Starting at around six years old, however, their brains start to transition from absorbing information to analyzing it. So when is the best time and where is the best place to teach kids about money?
Because of this, and because the majority of a child’s time is split between preschool/school and home, education in both places is crucial. If you haven’t started financial education for your child at home yet, there’s no better time to start than today.
Benefits on Financial Literacy for Kids
Financial Education Can Deter College Debt
We live in a time where financial education is more critical than ever. According to Student Loan Hero, student loan debts are at a record high, with the Class of 2017 graduates racking up 6 percent more debt than the previous year. They go on to mention that, collectively, Americans owe over $1.48 trillion in student loan debt, spread out over 44 million borrowers. They’re called scary statistics for a reason, and it’s something that parents should be actively raising their children to stop. With early financial education, children won’t grow up with the massive weight of student debt on their shoulders.
Money-Smart Kids Have Better Credit & Less Financial Burdens
Even before college, the statistics aren’t promising. According to youth.gov, a survey of 15-year-olds in the United States found that 18 percent of them never learned fundamental financial skills such as comparison shopping, understanding an invoice, and building a simple budget. Learning those crucial life skills starts in the home, and carries forward into school. It doesn’t necessarily mean your child has to be a certain age before they can start learning, either.
In fact, in a lot of cases, the earlier the better. Children who take just basic financial classes are far ahead of those who simply absorb what they see around them, especially if what they’re seeing are bad financial habits. Kids who take finance classes take what they’ve learned and apply it throughout their lives, leading to better credit scores and lower debt, according to FINRA. That’s an easy solution, and something to be proud of.
Financial Education At Home or At School?
Financial literacy can be taught either in the school or at home, which leaves a lot of options open to every style of parenting. No matter what you decide, simply know that the time is short. Children learn more and more each day, and that includes both good and bad financial habits.
To help you make the best decision for your family, here’s a brief look at the pros and cons for teaching your children finances at home and at school.
The Pros of Teaching Kids About Money At Home
Children observe and learn from those that they know and trust best. Which means parents are the most influential people in their lives, especially mom. When kids are young, they’re with mom (or whoever takes care of them throughout the day) all the time. So they absorb the hands-on skills their parent employs in things like budgeting, grocery shopping, and even in doing taxes. This also means that there’s an added responsibility on parents, to do the best they can to model good financial decisions. These day-to-day behaviors can show their children how to save and spend smartly, while also giving children space to have their own, real-life financial experiences.
On the other hand, teaching your kids good and consistent lessons about finance is a lot of work. It’s much easier for parents to just do the tasks themselves instead of walking their children though a task (oftentimes more than once). For car loans or taxes, it can be quite a hassle hauling everybody to the car dealership or the insurance office, or explaining even the most basic ideas behind simple taxes. It takes work, and parents must be accountable while modeling strong financial responsibility. Some are not ready to do so.
Many parents are afraid of their children picking up bad financial habits, so they avoid teaching them, to ensure that their children don’t get the wrong messages. Some children don’t have guardians who are active in their lives, which makes home teaching a moot point. Finally, some parents simply don’t know how to speak to their children about money and become even more paralyzed after each failed attempt.
The Pros of Teaching Financial Literacy At School
What about teaching finances in school, then? Teachers can take the opportunity to give their students hands-on life skills that impact their lives in school and after college. Unlike parents, teachers can also be more objective while teaching them good habits, to counteract the bad ones. They also have more resources, including time (a precious resource) in the classroom and materials. Plus it’s part of their job to schedule time to train their students up to be good stewards of their money.
Sometimes teachers either feel, or are actually, unqualified to be teaching on finances. And schools may fail to bring in help to supplement or take over. Other times, schools may not be able to find the time or finance classes start too late, just before kids shuttle off to university.
Another simple truth is that the financial class taught at school might just be boring. The teacher might have been dumped into the class, or treats it like a college lecture, instead of an important class teaching a life skill. Teachers might find it difficult, too, to get students to interact comfortably in the class if finances aren’t something that’s talked about in the home.
Why Both Are Good
With those facts in mind, you can weigh the pros and cons accurately. The best option, in many cases, is not a matter of saying ‘yes’ to one, and ‘no’ to the other. It’s in saying ‘yes’ to both! There is an order to it, however, and you can think about it like building a foundation. The work begins at home, as parents are the main, and oftentimes only, financial role models in their child’s life. But these principles that their parents are instilling in them should be built upon at school, where they’re learning supplementary and quality financial skills, to complement what they’re learning about at home.
Financial literacy starts with each individual, parent or teacher, committing themselves to being a faithful, strong role model for children who look to them for guidance. All it takes is the resolve to take the first step forward, and to allow a child to follow in your footsteps.