Money Matters: The Importance of Financial Literacy at a Young Age

You may not have even realized it, but from the earliest ages, you were building financial literacy skills that would come back to help you in your adult life. From your first piggy bank to your first mortgage payment, financial literacy is a necessary skill to help guarantee that your future dreams can become your reality. By establishing healthy building blocks for financial literacy at an early age, you can ensure that your children are ready to face the world in a realistic way so that they can live the financial lives they aspire to have.

To get an idea of how to encourage these early money management skills, we first need to take a look at what it means to be “financially literate” as an adult. Financial literacy is an understanding of various skills, tools, and concepts that allow you to make wise decisions when dealing with your money. Nowadays, financial literacy is more attainable than ever through the use of widely available tools like budget worksheet templates and budgeting apps. These have become increasingly popular with some of the younger generations, in order to help them along in their journey with financial literacy. Now more than ever, it’s important to know where to prioritize your spending, in which such technological tools can assist in those key areas.

Town and Country Bank and Peoples Prosperity Bank even offers our own innovative Financial Management Tool, which is available for free via our Online Banking platform. Our Online Financial Management Tool allows customers to track their spending, forecast their cash flow, create a budget, and track financial goals they have set for themselves.

Early Years

Instilling sound financial principles at an early age is the key to better understanding your money and managing it well throughout your adult life. Starting from the earliest ages, encouraging children to know their correct balance or even the cost of certain items, such as a toy or book, is incredibly important. While some parents may not be comfortable disclosing costs with their children all the time, there are ways to teach financial skills through play as well. Play cash registers, setting up a pretend “store” or even something as simple as having your child learn how to use a calculator to add costs at a young age, is a great way to get their minds focused on money management. A piggy bank or savings account that they can utilize later is also a great way to encourage them to save money starting at a very young age.

Teenage Years

As children move into their teenage years, encouraging a part-time job if they can manage the time, is an excellent way to not only teach them financial literacy, but also time management. Having a job and encouraging them to set financial goals will help immeasurably in their future. Whether the goal is a college fund or a car to get them to and from work and school, financial goal setting and learning to prioritize necessities early on is a definite way to encourage financial success. Show your child the cost of what they’re hoping to attain and help them by sitting down and having a conversation on how they can budget for it. Showing a child that their investment of time and money can pay off if they are disciplined as well as can have immense benefits for the future by making them financially literate adults.

Another great option for your children and their financial growth is to allow them to have and use a debit card so that they can track their money and see exactly where it’s going. Many children reach college age and have no concept of utilizing their own money. Therefore, some may spend frivolously when they’re first left on their own. Establishing healthy financial habits early in life and into high school and encouraging goal setting for their finances will give them an advantage over the children who were never taught to manage money well.

Good Habits into Adulthood

Ultimately, the best way to teach financial literacy to your children is to practice good money habits yourself. Involve your children in purchases and show them the best ways to responsibly use money so that they have a good foundation to model. Talk to your children about the importance of earning your own money and how to spend it wisely from a young age. The earlier you can instill good financial behavior, the more likely it will be that your children will succeed in being financially literate adults.

Let Us Help Your Family Achieve Financial Success

At Town and Country and Peoples Prosperity Bank, we’re here to help prepare you and your children for a successful financial future. By opening our personal checking and savings account options, we’re able to meet your needs and assist your children on their journey to effectively managing their finances. Whether you’re teaching your children to invest wisely or simply want them to be able to track spending, we have the right solutions for your family!

Ready to jumpstart your children’s financial journey? Contact us, visit one of our locations, or schedule a financial review today to connect with one of our experienced bankers who will help identify the best solutions for your children!