Money troubles often start as bad habits when young. Since only about half of the U.S. states offer financial literacy education, guidance from parents is vital. To avoid a life of money difficulties, consider these strategies to develop financial competency among young people:

• Connect money lessons with daily activities. Talk to children about money decisions when shopping and paying bills. Provide hands-on learning activities, such as making a shopping list or creating a family budget. Be a good financial role model by planning ahead, practicing self-control, disciplined spending, and ongoing learning. When shopping, talk about needs and wants, have children pay for low-cost items, and discuss package sizes and brands.
• Make use of money jars. At every age, three jars labeled SAVE, SPEND, and SHARE can provide a hands-on and fun experience for learning wise money management. Allowances, money gifts, and pay from a job can be divided among the jars.  If some money is kept in a bank account, instead of in the jars, slips of paper with amounts can be put in the jars as tangible proof of available funds for each category.
• Encourage entrepreneurial activities to earn money. Starting a business or working part-time can teach creative thinking, problem solving, resiliency, and curiosity.
• Start a savings account. Connect children early to saving for wise money management and to practice delayed gratification. Start with a basic savings account. As they get older, teach them about other savings plans (money market account, certificate of deposit) and other banking services. Connect savings to various goals. Research indicates that young people with a savings account are three times more likely to attend college, and four times more likely to graduate.  

Children with a strong financial foundation will be on a path to avoiding future money stress and obtaining long-term security.

For additional information on the financial success of children, click here.

Teaching Suggestions

• Have students talk to others to learn about actions people have taken to teach children about wise money management and smart shopping.
• Have students demonstrate (role play) how to teach wise money management or smart shopping to a young person.

Discussion Questions 

1. What did you learn about wise money management and smart shopping when you were young?
2. What actions might be taken with children to help them learn wise money management and smart shopping?  

CPAs and financial advisers point out five “silent killers” that create barriers for the successful implementation of estate, retirement, and investment plans.  These common mistakes are:

1. Unrealistic Expectations. A valid financial plan must be based on practical assumptions, such as an appropriate forecast of rate of return, inflation, and future cash flow needs
2. Emotional Decision Making. Feelings and personal sentiment must be identified and minimized when setting goals and planning financial projections.
3. Inflexibility. A useful financial plan must take into account unexpected events. Creation of an emergency fund and contingency plan is vital.
4. Inaction. Without a plan for action, the perfect financial plan is worthless. Common results of inaction can be not having appropriate of property and casualty insurance coverage, financial hardship of dependents due to inadequate life and disability coverage, failing to address how assets are to be distributed in an estate plan, and overlooking a tax strategy.
5. Unclear Values and Priorities. Being on the wrong path will result in an undesired financial destination. Reflection of areas of importance and priorities is fundamental for implementing a financial plan and achieving financial goals.

For additional information on financial planning silent killers, click here.

Teaching Suggestions

• Have students talk with others about barriers they have encountered in their financial decision making.
• Have students create situations that reflect each of the five situations. Ask them to suggest actions to overcome these difficulties.

Discussion Questions 

1. Explain which of these financial planning barriers you believe is the most dangerous.
2. What are possible actions a person might take to avoid these financial planning barriers?