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Financial literacy starts at home. Here’s how to make it less of a struggle.

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A Chime survey highlights that Americans tend to avoid discussing money matters. The poll reveals that a significant majority of Gen Zers and millennials would prefer discussing topics such as sex, religion, and politics over money. Moreover, a considerable percentage of millennials and Gen Zers would rather share their personal photos, messages, and dating profiles with their family than discuss their financial status.

It is noteworthy that Gen Zers and millennials tend to seek financial guidance from their parents more than any other source. Around 30 percent of them consider their parents or guardians as their primary source of financial guidance or knowledge, while their significant others, friends, and social media platforms come second at 22 percent, 13 percent, and 13 percent, respectively.

Although young adults often turn to their parents for financial guidance, a small percentage of Gen Zers and millennials feel that their parents did not adequately prepare them for managing finances. Only 18% believe that their parents provided them with sufficient knowledge about money management. Additionally, 17% learned from their family’s money mistakes and negative examples rather than positive lessons.

Communication is key

I strongly support the idea of financial literacy and believe that effective communication is crucial in achieving it. To begin with, I suggest parents to educate their children about money from a young age. Starting with activities such as sorting bills and coins or simply explaining the process of shopping can help. For instance, it’s important to make sure that even elementary school-aged children understand that a credit card is not a magical tool but represents real money that must be repaid.

Teach your children the skill of comparison shopping, which is important for everyone as we all are consumers. Show them how to spot the best deals by comparing different products, considering factors such as quality and quantity, and calculating unit pricing. For example, explain how a five-pound bag of apples for $5 is comparatively more economical on a per-pound basis than purchasing two pounds for $4.

Equating work with money is another important lesson

One of the main reasons I go to work is to earn money and provide for my family. I recall a time when my older daughter expressed frustration that I had to leave for work. In response, I joked that working allowed me to buy more toys for her and her sister. Her reaction then changed, and she even encouraged me to make more money so she could have more toys.

Offering your kids an allowance according to their age can be a beneficial approach to enable them to earn their own money and learn from their mistakes. It can be a significant lesson that working hard towards an objective can be empowering and instill a sense of pride and a robust work ethic in them.

It’s important to consider how your child will use their earnings and provide them with opportunities to practice spending, saving, and donating. You may notice that your child is more careful with their own money than with yours, and while they may make mistakes, it’s better for them to learn these lessons early on when the consequences are low. These are all valuable learning experiences.

Over time, find ways to layer in increasingly complex financial concepts

One way to help your teenager build good credit and learn responsible spending is by adding them as an authorized user on your credit card. This can also lead to important discussions about debt, which is especially important when considering college and the cost associated with it. Many students take out student loans without fully understanding the impact on their future careers and finances.

If you feel overwhelmed, you can seek help from your support network, like your spouse, friends, relatives, or professional connections. Many helpful resources, such as websites, books, and materials, are also available. It’s okay to ask for assistance, so don’t be afraid to reach out.

The bottom line

Teaching your kids about money doesn’t require being a financial expert. Just be open, truthful, and communicative. Even if you’re not confident in your own financial situation or expertise, be genuine and learn together. Ignoring the topic isn’t the solution. Rather, search for opportunities to teach at all stages. Making errors is acceptable as long as you’re progressing in the correct direction.

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