Did you know that Utah was the first state in the nation to make financial literacy a course requirement for high school graduation? It’s true! And it seems to be helping.
A study by the Utah State Auditor’s office conducted a financial literacy survey to compare Utah high school graduates who had taken the general financial literacy (GFL) course to their peers who had not and their peers in neighboring states.
“Survey results indicate that Utah public high school graduates who took one of the GFL courses for graduation exhibited higher average scores on both knowledge and behavior questions,” said the report He says. “There is a correlation between participation in the Utah GFL course and graduates’ improved personal financial knowledge and behavior over the past decade.”
This is a positive result, but it does not mean that the parents are out of the woods. Building a strong financial foundation starts at home! So talk to your kids about money, help them practice money management, and set a good example. You’ll be setting them up for financial success, and a high school financial education course will be a nice bonus.
1. Make money an ongoing conversation
Talking about money doesn’t have to be awkward. Start small and build an ongoing conversation that your children look forward to.
“Talking about money cannot be relegated to a one-time conversation,” he said. Lynne Somerman, money coach and founder of The Wiser Miser. “It has to be part of the day-to-day conversation. As money topics come up and your kids are around, talk about them as openly as you feel comfortable.”
To put this into practice, involve your children in everyday financial decisions. Planning your weekly menu? Have your kids check grocery ads to see what ingredients are on sale, and then build the menu around that. Or tell them how much you’re budgeting for summer bathing suits and let them pick out a cheaper pair of suits or a more expensive one.
2. Help children earn and save for themselves
When we manage all the money for our children’s school supplies and fun items, it becomes difficult for them to learn the value of a dollar. Help younger kids earn money for chores before heading to the toy store to buy a birthday present for their friend. Work with teens to find an after school or summer job to pay for a day trip they want to take during their next family vacation. It can be hard (for all of you!) at first, but giving kids hands-on experience is really doing them a big favor.
What else can you do? Here are some ideas for different age groups.
- For elementary children: Ask them to put their savings in a Mason jar so they can watch their money grow. Help them distinguish between different types of savings. For example, saving for a small toy at the store is a short-term savings goal, saving for soccer shoes next fall is long-term, and saving a fund in case your bike tire blows out is emergency savings.
- For tweens: Work with them to create a personal budget that includes savings. This is a good time to teach them principles like spending less than you earn and paying yourself first.
- For teens: help them set up a bank account, then remind them to deposit their money so they can watch their compound interest grow.
3. Set a good example
Actions speak louder than words, so discipline yourself to live the financial principles you’re teaching your children. Be sure to make sound financial decisions that will benefit both you and your children as you watch and learn.
“Money matters don’t have to be that complicated,” said Lyle Daly in http://tonto.com. “There are some key principles that can make or break you, and if you want to build a strong financial future, you need to know them by heart.”
Here are five principles everyone should follow:
- Spend less than you earn. The general rule of thumb is that you should save at least 20 percent of your income.
- Maximize your income. “The amount you can save by cutting your expenses is limited,” Daly said. “Instead of trying to budget your way to get rich, you’re much better off looking for ways to make more money. Negotiating a raise, finding a better paying job, becoming self-employed, or starting a side business are all ways you can make more money.”
- Plan for emergencies. Save an emergency fund with three to six months of living expenses. Make sure you have adequate health, renters/homeowners, and auto insurance.
- Build your credit. Pay your credit card every month, pay your bills on time, and don’t exceed your credit limit. These behaviors will make you eligible for better interest rates, car insurance rates, and maybe even better jobs.
- Save for retirement. Save each month and take advantage of tax breaks offered through 401(k)s or IRAs. Every bit counts!
Financial education may be required in Utah high schools, but parents should help their children learn good personal finance habits from an early age. Talk to your kids about money, help them practice money management, follow the principles you teach them, and consider getting professional help for a personalized guide. You and your children will benefit from being proactively wise with your money.