Just 24% of Latinos rate their personal finance as excellent or good, compared with 38% of the general public, according to the 2011 National Survey of Latinos conducted by the Pew Hispanic Center. To change those numbers we have to start educating our children about personal finance.
Giving your child the opportunity to think critically about personal finance is the best way to teach personal finance in the home. Having your child work for an allowance helps the child make the connection between earning money, saving money, and spending money. Migdalia of Latina on a Mission says, “My sons get a stipend; I do not like to call it an allowance since they have to work for it. This is given if they do well in school and complete their chores.” Requiring children to do something to earn an allowance also teaches them the value of a dollar. Children may not be as quick to spend money that they had to earn because they’ll know how much more they have to work to earn more money.
Sitting your child down and setting the parameters of the allowance agreement (who will do what for how much money) is the first step. Creating a poster with a list of each child’s name with a list of each duty to be done on each day is the next step. Hang the poster where everyone can see it and make note of which duties have been completed. At the appointed time, I suggest once a week, “pay” the child for all completed duties. A great way to help children grasp personal finance concepts is through experiential learning. Provide each child with four piggy banks: Spend, Save, Invest, and Charity. Each “payday” they should contribute something to each jar. You can help your child decide what to use each piggy bank for. Another way to go is to have your child open up an account at a credit union or bank. Take them to the credit union and let them deposit the money and keep track of how much they have. Let them talk with the teller and make sure they know that they are in charge of their money. They may spend it and make a few bad decisions, but it’s better for them to make those mistakes now than as adults.
Does all of this sound like a bit much? It doesn’t have to be a big production. Instead of giving an allowance some parents use “teachable moments.” Teachable moments are the times when something happens in everyday life that provides an opportunity for you to discuss personal finance with your child. Diana lives in Brooklyn and has a 9-year-old son named Caleb, “It hasn’t been a very large conversation but something that happens naturally as we go food shopping, or occasionally toy shopping, or when we go banking.” Using everyday situations to show your child how to make good decisions about personal finance is important. Diana says, “I always ask my son, “Do you really need five versions of that Beyblade?” And he will think about it and say “maybe not.”
Melanie at ModernMami says, “I don’t have my girl on allowance. She does chores, but that’s just something she has to do, not for earning an allowance.” Whether you give an allowance or not, it’s important to help your child learn personal finance concepts. Children start learning as soon as they are born, and some would argue before. Everything that they see, hear, and experience is used to determine the choices they make. To that end, here are a few resources to help teach children about personal finance.
2 to 5-Year-Olds
6 to 11-Year-Olds
12 and Up