Financial Literacy

Financial Literacy Makes A Difference

Financial Literacy Infographic

My father gave me the gift of financial literacy and it was one of the greatest gifts he gave me. Everyone handles money and makes decisions every day on how to use their money. Too often kids leave home without even a basic understanding of how money works. This doesn’t happen because they have bad parents, but is the result of many pervading myths, including the belief that money isn’t discussed within the home.

If you’re like me, you want to give your kids the tools to succeed in life and that includes financial literacy. This knowledge isn’t always meet with much enthusiasm as some parents don’t feel prepared to be the teacher. I understand but you are more qualified than you may realize. The majority of what you need to teach your kids are the things that you are (hopefully) doing today.

Easy Ways to Talk to Kids About Money

The best thing parents can do is openly talk to their kids about money. Don’t let money remain a taboo topic in your home. Here are a few easy ways to start the conversations.

This is just a small sampling of some of the ways you can teach your kids about money. You can find more details and additional lessons to teach your children in my downloadable workbooks. If you do these lessons consistently, you can instill good money habits in your kids and help them build a positive relationship with money. Edutopia put together a great infographic showing the impact financial education has kids.

Financial Literacy Pays Off Infographic

One thing I consistently hear from readers and clients is that they wish their parents had talked to them about money when they were growing up. It’s time to break the silence and start talking to kids about how money works. It does make a difference in their lives.

How are you talking to your kids about money?

Shannon

The Heavy Purse Store is now open! My new downloadable Money Club Workbooks—based on age or level of expertise—are now on sale. Each workbook provides five targeted lessons to help you grow Money Smart Kids. Please check them out in The Heavy Purse Store.

October 21, 2013  •  40 Comments  •  Financial Literacy

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  1. Monday, October 21st, 2013
    Well, I'm not talking to my kids about money because they aren't born yet! Haha, but I'm starting to think that financial literacy may be the most important thing for them to understand before they leave for college. Last night I was blogging and thinking about how ridiculous it is that there isn't a finance/business class required in high school curriculum. Think of how much material you could cover in a quarter or semester! My mind is racing just thinking about it.
    • Shannon
      Monday, October 21st, 2013
      LOL! It is hard to talk to kids about money who aren't born yet. :) I agree, DC. Financial literacy is so important to kids financial well-being as adults and it's something that few parents realize. It is really unfortunate that so few schools have embraced financial literacy and it's a topic that can be weaved into so many classes too.
  2. Monday, October 21st, 2013
    Shannon, I am amazed at how the above tips have groomed our kids with serious financial wisdom. They've become very responsible kids now, as they understand about deciding what purpose they want money for, how to earn it, and how to manage it. We are SO thankful they have the tools to NOT follow our path into massive debt.
    • Shannon
      Monday, October 21st, 2013
      I love it, Laurie! It just makes me so happy to hear how you and Rick are teaching your kids to be Money Smart. I can see the difference my money lessons have had on my own girls and I am so proud of how thoughtful they have become with money. They appreciate and respect it. They think before they buy something and don't feel deprived when they decide against buying something because they know they're saving for something they want more.
  3. Monday, October 21st, 2013
    We do talk to our kids about money and they're already trying to find ways to work the system. My daughter thinks she deserves a quarter every time she cleans her playroom now =)
    • Shannon
      Monday, October 21st, 2013
      Uh-oh! You're daughter is catching on fast! :) She wants to be paid well for her hard work. Smart girl!
  4. Monday, October 21st, 2013
    Great tips as always Shannon! We've found the sharing of our decision making to be a huge one, especially for our six year old. It helps her to understand, albeit in smaller amounts, the "why" of why we're not purchasing something. I think that's so vital as it can help set that foundation you can build upon as they get older and hopefully wiser. :)
    • Shannon
      Monday, October 21st, 2013
      Thanks, John! Sharing your decision-making process is so beneficial. Otherwise I imagine from a child's perspective the things we buy look very random and that we buy whatever we want. I know having these talks with my girls have really helped too and as you said - create that foundation they can build upon as they get older.
  5. Monday, October 21st, 2013
    I think you're spot on that the first step is simply talking about money. They need to know that it's okay to talk about and feel comfortable doing so. When they get old enough I think there's no substitute for experience. Give them the opportunity to make their own decisions (with some guidance) and let them learn from the consequences. There is no one-time solution. It's an ongoing process.
    • Shannon
      Monday, October 21st, 2013
      Money is definitely something families need to talk about. There is nothing "bad" about money and it shouldn't be a taboo topic. I want my girls to feel comfortable talking to me about so money so when they face a tough money decision when they get older, I'm their first phone call! :) Nothing beats hands-on experience and being able to guide them through it when they are young, helps them make better choices as they grow older too. And you're absolutely right - this is an ongoing process which I don't think we emphasize enough. It's not one and done.
  6. Monday, October 21st, 2013
    I'm such a fan of the save, spend, share system you recommend for kids. Asset allocation is the key to my making my budget and my lifestyle possible.
    • Shannon
      Monday, October 21st, 2013
      Thanks, Stefanie! I appreciate your kind words. It's great that you're using asset allocation to create the life you want.
  7. Monday, October 21st, 2013
    Great stuff Shannon! What an awesome tip to let your children manage a small budget for a party or activity. As the info graph states, half of Americans don't even do a budget. Better to get this training now under our watchful eye. And while it's important to talk with our kids about money, it's just as important to model what we teach. They will reject the message if they don't see us living it.
    • Shannon
      Monday, October 21st, 2013
      Agreed! You definitely have walk the walk, otherwise it won't mean much to them. They do watch to make sure our words and actions match. Lauren did a great job with birthday party budget last year. She thought she had a huge windfall until she started pricing out all the things she wanted. The best part was she learned that she could have a fantastic birthday party on a budget. So many people don't follow budgets because they think they are too restrictive so I definitely want the girls to learn to embrace them.
  8. Monday, October 21st, 2013
    35% of high school seniors use credit cards???? Wow... I didn't have a credit card till I was in college. What do you have to buy in high school that you need a line of credit for? Very interesting, Shannon. Very interesting...
    • Shannon
      Monday, October 21st, 2013
      Honestly, I want the girls to have a credit card in high school because I want them to learn how to use them properly while they still live at home. However, I suspect the majority of high schoolers who have credit cards today didn't receive them as a way to learn how to use them before they left home unfortunately.
  9. Monday, October 21st, 2013
    Like Mackenzie, I'm surprised that the rate for high school seniors with credit cards is that high! I know that the companies used to go to campuses (though not sure it's allowed anymore?), but how do high school seniors get access, I wonder. Interesting stuff, Shannon, and great tips as always!
    • Shannon
      Monday, October 21st, 2013
      Thanks, Anna! I imagine their parents co-signed for them and hopefully set a low limit and are teaching their kids how to use them properly. Unfortunately, I'm not 100% confident the latter part is happening.
  10. Monday, October 21st, 2013
    As you know, my father also gave me the gift of financial literacy. I love how strongly you advocate for parents to do the same. Hopefully the next generation won't be saddled with the same lack of financial knowledge! At least your girls won't be.
    • Shannon
      Monday, October 21st, 2013
      You are definitely proof that financial literacy pays off, Erin! Your parents should be very proud. :) Financial literacy is my passion and I very much believe that it makes a huge difference in kids lives. We do so much to try and give our kids the best life possible but we don't talk to them about how to handle money, which is one of the most important things we can do. Financial illiteracy is reversible but only if we start talking to our kids.
  11. Corina Ramos
    Monday, October 21st, 2013
    Hi Shannon,

    Thanks for this infographic.

    I tell you, the advice you give is right on. I've seen my two younger teens really change their mindset about money. Marisa wanted to buy a bag today and I was reluctant but she had a $10 off coupon and 20% off that she used and she saved more than half of the item. It was a bag for school so that was a great purchase.

    Now they're focused on saving for college and looking at sites for buying used books and stuff like that, so thanks for all your advice! I'm starting to like my teens ;).... lol.

    Happy Monday hon!
    • Shannon
      Monday, October 21st, 2013
      Hi Corina,

      That is fantastic that your kids are really getting the hang of making thoughtful money decisions. They are developing a great money mindset and you should be proud of them! You have a great week too!
  12. Monday, October 21st, 2013
    Kids do think that everything is a "need." I like the idea of giving them a budget and letting then decide what to buy. I've done this with buying birthday or Christmas gifts for relatives. She can pick whatever gift she wants as long as it costs less than our pre-determined amount. I did have to step in when she wanted to buy Disney Princess Candyland for her dad, but other than that, it worked pretty well.
    • Shannon
      Tuesday, October 22nd, 2013
      They do, although in fairness I probably did too when I was their age. :) I am really impressed with how the girls are handling budgets and seem to enjoy working with them, which makes this Mom pretty happy! I love that your daughter wanted to her Dad Disney Princess Candyland. Too precious!
  13. Tuesday, October 22nd, 2013
    Next week I'm planning to open my daughter's bank account because every penny she has she immediately put it in her piggy bank. I'm lucky with my daughter she understands the value of money, if she wants me to buy something she asked me first and didn't insist to buy if I refused her in a good way.
    • Shannon
      Tuesday, October 22nd, 2013
      That's great, Clarrise! It sounds like your daughter is going to be a money pro by the time she's an adults, which is a great place to be!
  14. Tuesday, October 22nd, 2013
    When you're young, you don't realize the consequences later on that bad money habits can stir. But the earlier we can begin to educate and form good money habits in our children, the better. Great tips Shannon!
    • Shannon
      Tuesday, October 22nd, 2013
      You really don't Anthony. I think many parents think "I'll talk to them when they get older" and they keep delaying the conversation until they are chasing after them as they head off to college. The earlier we can start the conversation - the better. Kids are far more open to having these conversations than we often realize.
  15. Tuesday, October 22nd, 2013
    I think the best way to teach your children to be responsible with money is to show them by example. My friend was saying "no" to purchases that his kids wanted to make saying that they couldn't afford it or that it was not worth it...but then he turns around and spends money frivolously on himself. That sends a mixed message.
    • Shannon
      Tuesday, October 22nd, 2013
      Agreed, Andrew! Our words and actions need to match otherwise we are sending mixed messages. It's one of the reasons I dislike "we can't afford it", especially if it's not given without a reason "why". They may believe their parents are lying to them or spend money arbitrarily, neither are lessons we want to teach our kids.
  16. Girl Meets Debt
    Wednesday, October 23rd, 2013
    The one "good" thing about my debt now is that it has finally taught me to be financially literate and I am so happy I finally have the tools to pass that on to my future children. They won't be writing debt blogs. Hopefully they will be writing blogs about frugal but fulfilling lives with their PF parents :P
    • Shannon
      Wednesday, October 23rd, 2013
      Debt may not be any fun but when it leads to financial literacy and financial freedom at least some good comes from it! leYour kids definitely won't be writing debt blogs. :)
  17. Friday, October 25th, 2013
    I keep finding myself talking about your blog to people I see everyday, especially those with kids. What you're doing is so important, and I think all kids should be raised to be financially aware and responsible!
    • Shannon
      Sunday, October 27th, 2013
      Thanks, Vanessa! I appreciate your kind words and support!! I agree that kids need to be financially aware and responsible and it's something that isn't on most parents' radar unfortunately. I'm glad you're helping spread the message!
  18. Monday, October 28th, 2013
    Am forever grateful to my mum for imparting some crucial lessons about money early on in our lives...not so much through talking to us but by being an example and involving us in most pertinent financial decisions. Examples stick much better and am hoping to do the same with my kids...
    • Shannon
      Monday, October 28th, 2013
      Sounds like you had a wonderful mother, Simon. Setting a good example is so important. Kids are always observing us and often times the things we do carry more weight than our words. Your Mom was a great role model for you and I'm sure will be the same for your kids.
  19. Monday, November 4th, 2013
    The idea behind financial literacy is nothing less than noble. Many young adults reach college and decide to take out student loans, and it being their first encounter with credit and technical financial matters, they often get the raw end of the deal. If we teach children about such matters from an early age, the impact is much greater than teaching them once they start attending college.
    • Shannon
      Tuesday, November 5th, 2013
      Agreed! The earlier we start talking to kids about money - the better. Too many wait until their kids are heading off to college and that is too late in my opinion. If they learn at a young age how to think about money and how to use it in alignment with their values, they can make smart choices with their money.
Shannon Ryan SHANNON RYAN, CFP®
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.” - Shannon Ryan
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