Momentum - Business to Business Online Magazine MOMENTUM October 2019 | Page 30

EDUCATION
JODY CERISANO
Executive Director
Huntington Learning Center of League City and Clear Lake
HuntingtonHelps.com | Facebook | Instagram | LinkedIn | Twitter | YouTube
Teaching Children Financial
Literacy as a Way to Build
Practical Math Skills
B
efore parents send their children off to college
and into the real world, there are many skills
they must ensure they have. With so many
academic skills taking front and center,
financial literacy isn’t always top of mind for
parents. The great news is that when parents make the
effort to educate their children about saving, budgeting,
spending, credit and more, they’re also building their
children’s practical math skills. Here are some ways you
can nurture those skills:
1. Open a savings account for your child. Take your
child to the bank to open his or her first bank account.
Show your child how to record deposits, withdrawals
and interest in the register and explain how compound
interest works as the account grows. Check with the
bank on whether they offer any handouts or workshops
for children who are just starting to save and learn
about money basics.
2. Give an allowance. An allowance is one of the best
ways to give children practical examples of what their
relationship with money will be like in the future. Per-
haps you can establish that different types of chores
earn different wages and leave it up to your child how
much money he or she wants to earn each week. Then,
encourage your child to set aside money for saving, in-
vesting, and spending, and take him or her to the bank
every month to make a deposit.
3. Discuss the difference between saving and invest-
ing. Speaking of saving and investing, talk with your
child about what each of these means. Explain that
saving is setting aside money for safekeeping for the
future, while investing is trying to grow that money. Talk
about the various ways to grow money. Explain how
certain investments are riskier, and thus, earn greater
returns. You might even share your monthly savings
account statements vs. your monthly 401(k) statements
to show your child the difference.
4. Have your child help you update the family budget.
If your family uses a budget—either a spreadsheet or
through an app—have your child help you update it
each week or month. Alternately, have your child cre-
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ate a budget of his or her own, starting with all income
sources (e.g. allowance, birthday money, part-time job
income) and listing out any expenses (e.g. clothes, gas
money). Share a high-level version of your household
budget and how you decide how much to save and
invest every month.
Just as children need to think about career paths and
their viability before they go to college, they also need
to build their financial literacy. When parents teach their
children about budgeting, credit, income, and paying dif-
ferent expenses, they’re also strengthening their ‘money
math’ knowledge, including concepts like decimals, per-
centages and reasoning. These are skills children will put
to use and appreciate in adulthood, and the earlier you
teach these ideas, the better.