By Jaida Redwood
Children are the future and legacies of our family, but too often are not educated about how to manage money when financial skills are one of the most important skills for navigating life.
A Cambridge University study in Britain found that most children formed core behaviors, which they will take into adulthood, by the time they were 7 years old.
At the age of 7, children can recognize the value of money and what they can get in exchange for having it. Youth financial capability grows over time and is a key stepping-stone on the path to adult financial well-being.
For too long within our community, we have been consumers instead of producers. Essentially earning money and spending, not earning money and saving/investing to produce more.
When I was a child, I would ask for something I wanted and be given it, dependent on good behavior or good grades. Saving wasn’t something that was made to be important to me in my household, but having manners and good grades was mandatory.
My first job at 15 years old, I made $6.75 per hour working 15 hours a week. That was decent money for a high school student who didn’t have any bills… but I didn’t save a penny.
Every two weeks on payday, I went straight to the store to purchase the newest sneakers or the hottest jeans to “look cool”.
I didn’t think about saving for the future , I couldn’t even make my bi-weekly payments last to the next pay day,
By the time the second week came around I was broke and often not having enough of my own money to make it to work, leading to borrowing from my parents.
At the time, I thought it was fine because that’s what parents are there for right?
No.
I wasn’t learning the value of money.
After two years working at the Queens Public Library, I had earned a little over $10K in income before taxes with zero savings to show for it.
This was a cycle that continued into my adult life because I didn’t have any money management skills instilled in me as a child.
I didn’t learn the value of delayed satisfaction, due to generations of mismanagement of money being passed down and financial management not being held on the same level as being respectful to others and doing well in school.
I share my story to say that our youth can do amazing in school, get into a great college, get a great job, make a nice salary, but be broke because they didn’t learn how to properly manage their money and build financial wealth.
What can we do to instill financial skills in our youth?
Begin teaching our youth about money management as early as 3 years old.
The sooner a child learns how to delay gratification and wait to save for something they want, the more financially successful they can be as an adult.
What are some effective ways to teach young children about money management?
Grocery shopping:
Give your child the task of buying something in the store with a set amount of money.
Take the time to weigh value to quantity with your child.
For example, you can give your child $5 with the option to purchase two cartons of strawberries or 1 bag of cherries for $5. Explaining that you will get more fruit by choosing to purchase the strawberries during the 2/$5 deal.
Toy purchases:
Children often see the newest toy or video game they want on T.V. commercials, through friends, social media, etc. Use this as a teaching opportunity to save.
Toys can be used for more than just good behavior and grades.
Find out the price of the toy that they want and discuss chores around the house that they can do to earn money to save for it.
When using this exercise for learning, make sure the toy isn’t too high in price taking months for the child to achieve the goal.
Children have shorter attention spans, and our goal is to keep them interested while learning, earning, and saving.