It's never too early to start
The increasing demand for financial literacy and education
In today's complex financial world, it is more important than ever to be financially literate. Financial literacy is the ability to understand and manage your personal finances effectively. It includes having a basic understanding of financial concepts such as budgeting, saving, investing, and debt.
There is a growing demand for financial literacy and education for a number of reasons. First, the financial landscape is constantly changing. New products and services are being introduced all the time, and it can be difficult to keep up. Second, people are living longer and need to save more money for retirement. Third, the cost of living is rising, and many people are struggling to make ends meet.
Financial literacy can help people make better financial decisions, improve their financial well-being, and achieve their financial goals. For example, people who are financially literate are more likely to:
Create a budget and stick to it
Save money for emergencies and retirement
Invest wisely
Avoid debt traps
Make informed financial decisions
Because many schools don't teach our kids the basics, we love to do this in our household for our six-year-old. We reward him weekly for a list of chores he does. Our weekly allowance is quite hefty; $100. At first glance, one might ask why are you giving a six-year-old $100 a week for an allowance, what's that going to teach him? Well, that number is before taxes, rent, utilities, and other "adult" expenses that he'll have for the rest of his life so why not start now? This activity gets him in the habit of knowing not all of that earned money is his. He has to plan and understand that the tax man is a beneficiary of some of that money.
We also like to encourage a saving component. If he decides to have a portion of his allowance go into his "savings" we match whatever he puts in. That does come with a catch though. If he puts money into this bucket, he agrees he won't spend or use it for at least two years. That's almost an eternity to a first grader, but when he puts money there, he also knows Mom and Dad will match it and it will be worth much more later on.
The final buck of savings for our kiddo is a "spend now" account. This is where he can use the money to save up for a Lego set, sporting activity, or sports trading cards. He understands this bucket very well. Even though it's labeled the "spend bucket" he always thinks twice when he knows it will bring down his balance.
At the end of the day, these types of activities taught at such a young age help our kids grow up to be financially responsible. He'll understand the difference between a debit card and a credit card. Our son will also know how to sign his name, write cursive, and fill out a check. All of these aren't mandates in our schooling system now and that leads to a much bigger discussion that I'll save for another blog.
There are a number of ways to improve your financial literacy. You can take financial literacy classes, read books and articles about personal finance, or talk to a financial advisor. There are also many online resources available, such as websites and apps.
Financial education is especially important for young people. Young people are just starting out in their financial lives, and they need to have the knowledge and skills to make sound financial decisions. Financial education should be taught in schools and at home.
Here are some tips for improving your financial literacy:
Start by learning the basics of financial concepts such as budgeting, saving, investing, and debt. There are many resources available to help you learn these concepts.
Create a budget and track your spending. This will help you to understand where your money is going and make necessary adjustments.
Set financial goals. What do you want to achieve with your money? Once you know your goals, you can start to create a plan to achieve them.
Educate yourself about different financial products and services. This will help you to make informed financial decisions.
Seek professional advice if needed. A financial advisor can help you to develop a financial plan and make informed financial decisions.
Financial literacy is an important life skill. By improving your financial literacy, you can make better financial decisions, improve your financial well-being, and achieve your financial goals.
If you haven't checked out my PennyWise Financial Podcast, watch a look at a clip from one of the shows featuring my son Sebastian. Scroll down to watch the entire episode. It's available on all major podcast platforms like Apple, Google and Spotify.
👇Or click below to watch the full Episode
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