I can remember learning how to write out a check and balance a checkbook in the 7th grade. That was it, no other money lessons were taught from primary school all the way through high school. That was the late 80s, and I doubt they even teach how to do that anymore. As more electronics do our thinking for us, we’re growing up financially illiterate.
What Schools Don’t Teach About Money
When it came to the college application process and anything related to it, I was on my own as a first-generation student. I had to figure out things out on my own because, sadly, our high school education doesn’t do a good job of providing the vital information students need about college life and especially personal finance.
The first time I ever got personal finance advice from an adult that wasn’t family was my senior year of high school, from my AP Psychology teacher. He pointed out how sometimes our education system fails to educate us on important life lessons and told me to never pay the minimum due on my credit cards but instead to pay them in full.
This was like a slap to the face because I used to tell my mom to only pay the minimum since it made sense. That’s all they were asking for, so why pay more? My mom was also naïve about finances when I was growing up.
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Important Money Lessons Nobody Teaches You
That’s when I realized personal finance was the most important life lesson we are never actually taught in school. Instead, we have to learn on our own or from our parents. For me, though, it was the other way around. Often times I had to teach my mom about personal finance.
This was when I realized how important personal finance was, and it was even more important when I was graduating high school I had no idea how I could make college affordable for my mom and I. I decided to take a gap year.
Money wasn’t the only reason for taking a whole year off, but it was definitely a big part of it. I took the year to figure everything out about school and personal finance on my own, and I really learned a lot.
I learned about budgeting, and I kept a budget all year long because I was very dedicated to saving up to pay for school. I learned about credit cards and life insurance and everything I could about investing and making the most of your money.
I learned about goal setting and working for something. It was very helpful because, by the end of the year, I had a whole new perspective on money. I learned all this on my own, on my own time. My mom and dad helped by learning with me online about money and all the other money lessons they didn’t teach in school.
Some of the personal finance lessons I learned from my family came from my uncle, who is big on investing. He really showed me the process and also the risks to investing your money. I was intrigued, but I definitely know I need to be more financially stable to do any investing on my own.
Money Lessons Children Must Learn at an Early Age
It is never too early to start teaching your children about money. In fact, the sooner they start learning these valuable lessons, the better off they will be in the future. Here are some of the most important money lessons that children must learn at an early age:
1. How to Save Money
One of the most important money lessons that children can learn is how to save money. Encourage your child to start saving for a specific goal, such as saving up for a new toy or a trip to Disney World. You can also help your child set up a savings account so that their money can grow over time.
2. How to Spend Money Wisely
Another important lesson for children to learn is how to spend money wisely. Teach your child to think about what they need versus what they want and to compare the cost of different items before making a purchase. Encourage your child to save up for big purchases rather than spending all their money on small things.
3. How to Generate Income
Another key money lesson for children is learning how to make money. Help your child come up with ideas for ways to make some extra cash, such as starting a lawn care business or selling lemonade on the street corner. Teach your child the importance of hard work and perseverance when it comes to making money.
4. The Value of a Single Dollar
One of the most important lessons that children need to learn is the value of a dollar. Show your child the worth of a dollar by breaking down everyday expenses into fractions and percentages. For example, explain that 10% of an item at the store costs ten cents, while 20% of the item costs twenty cents.
5. Earning Interest on Money
Another important money lesson is learning how to earn interest on your savings account balance. Show your child how their money can grow over time if you keep it in an interest bearing account instead of spending it right away or keeping it under a mattress somewhere.
You may even want to open up a college savings account for them once they reach adulthood and start working full-time so that they can save up for school tuition and other education expenses later on in life.
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6. The Importance of Knowing Debt
Another key money lesson for children is learning about the importance of debt. Explain to your child how borrowing money can get them into trouble if they are not careful.
Teach them the difference between good and bad debt, and explain how taking on too much debt can ruin their credit score and make it difficult to buy a car or house later on in life.
By teaching your children these important money lessons at an early age, you will help them become more financially responsible adults. These skills will serve them well in the years to come and help them stay out of financial trouble as they grow older.
The sooner children learn about money, the better off they will be in the future. In addition to teaching your child about saving money, spending money wisely, and making their own money, you can also teach them the importance of debt and the value of a dollar. By starting these lessons early on, your children will be more financially responsible adults in the future.