As I sit in my home office (aka the kitchen) during these unprecedented times, my teenage twins have finished their daily school work and are Zooming (a new verb!), face-timing or X-Boxing with their friends. I hear them talking not only about how much they miss each other and their lives before the shelter-in-place, but also about all of the board games they have rediscovered from their younger days. I am thinking about how we are all adjusting to new norms – working from home, schooling from home, grocery shopping with masks on. While our world is being turned upside down, we are also having a lot of great family time and creating many memories. My wife and I have had many conversations about “are we doing enough” during these days that go by slowly and yet weeks that are flying by. Before we know it, we will (hopefully) be back to crazy days of sports and music practices, dinners on the fly, and going out with friends. When we look back at these slower weeks and months, we want to make sure that mixed in with the endless family movie nights and board games, we have also taught our kids a few life lessons. One of those life lessons is hopefully how to make a killer grilled cheese sandwich! Another is the basics of financial literacy. Not only have our work and school lives been turned upside down, but for many families, their economics have changed as well. I want to share with you some of the basics of financial literacy that I am sharing with my kids. Hopefully they will never live through another pandemic, but they will likely save for a house at some point or live through a job loss. Having an understanding of financial literacy will help at any age.
This overview off financial literacy can help you start the conversation:
1) Credit and Debt
Teaching children how to manage their spending and about the costs/benefits of credit and debt can be difficult.
If you are thinking about a prepaid debit card for your young adult, make sure you are aware of the fees.
You can use this calculator to see the impact of credit card debt
One of the most important lessons we can teach our children is about compounding interest and the time value of money. As your children become young adults and are preparing to embark on their own exciting careers, one of the most valuable gifts you can give them is the wisdom to save early and save often. Benjamin Franklin didn’t just say “A penny saved is a penny earned” – he proved it!
3) The Time Value of Money
Most of us will not likely create a trust for 200 years like Benjamin Franklin, but we will save for our retirement. Saving early can have a major impact on your retirement savings. Show your children the importance of saving early!
4) Inflation – Can inflation impact your investments?
5) Identity Theft and Safety
Unfortunately, identity theft has become common in our digital world. What can you, as an individual do to protect yourself? The SCAM method can help!
While it seems as if our current situation will never end, it will. Until then, take advantage of this time with your family and children. Use this as an opportunity to teach them those skills that will last them a lifetime. For further information about the financial literacy gap, check out my previous blog…