How To Teach Financial Literacy To Younger Generations

Teaching financial skills to the younger generations not only benefits the individual but also society as a whole. 

When you teach children financial skills while their minds are still developing, you instill lifelong healthy habits and set them up for a more financially secure future. Research has even shown that financial literacy in teens correlates closely with asset accumulation and net worth for people aged 25. 

We’ve pulled together some tips to give you some ideas for educating and engaging your children or grandchildren on financial concepts. But first, we’ll talk more about why teaching these skills is so important. 

The Importance of Teaching Younger Generations About Money

There are many reasons why we need to teach financial skills at a young age. A big one is that when young people learn good habits and values around money, they are less likely to get into debt when they are older. 

It also allows them to see how they can grow their money, make it work harder for them, and how they can save for their retirement. In addition to all of this, it can help them be better business owners or leaders in the future. 

This knowledge and confidence with money is invaluable, especially if they will one day be involved in the family business or managing generational wealth. 

In most cases, financial literacy needs to be taught and should be done so from a young age. In one study, 74% of teens reported not feeling confident or knowledgeable about personal finance. This shows that there is work to be done.

How To Engage Younger Generations With Financial Literacy

1. Harness Technology and Resources

GenZ has grown up with technology and social media, so it makes sense that when learning about financial topics, they would use these same resources.

This might be a social media app or a special online training platform for learning about trading. Whatever it is, making sure the way they are learning is fun and in a format that is familiar to them, will make all the difference. However, not all information online is correct, so this should be monitored closely.

If your children are younger, you can make learning about finances fun through board games like Monopoly.

2. Start Them Young 

Becoming financially literate takes time and experience. Therefore, it’s never too early to learn good money principles.

If you have young children or grandchildren you can give them an allowance or let them earn money around the house. It’s also a good idea to open a savings account for them as a way to start teaching basic money concepts such as saving and delayed gratification. 

3. Make It Tangible and Real

Learning about finances from a purely theoretical standpoint could bore a lot of younger people.  However, if you teach them using real-life examples or exercises, it’s more likely to interest them. 

If you have children who are of legal working age, you could encourage part-time work. You can then help them navigate what to do with their earnings. This might include learning how to budget. It could also be investing with a custodial account, saving for specific purchases, or opening a Roth IRA. 

4. Check Your Attitudes and Values Around Money

Children are always watching and learning from us. As they grow, they start to notice your financial habits and general attitudes toward money. They then assimilate these ideas.

As these habits will naturally trickle down to your children, you want them to be healthy and productive. This could include things like budgeting for monthly expenditures, avoiding impulse purchases, making charitable contributions, and taking good care of possessions. 

5. Have Open Conversations About Money

Conversations about money are healthy and necessary, after all, financial concepts can be complex and money is something we have to deal with every day as adults.

Money conversations naturally come up every day. For example, a trip to the grocery store presents many different ways to talk about money. You could talk about prices, markups, inflation, how to choose a better deal, and the benefits of buying in bulk.

While you are talking openly about money, it’s also a good idea to share some of your own experiences. Sharing some of the financial successes, and failures that you’ve had in your life and the lessons you learned can help them learn and avoid the same failures in the future. 

5. Look for Advice

Younger generations are faced with different challenges to the ones you likely faced at their age. Firstly, the financial products offered to them are different and technology now plays a larger role. Secondly, personal advice and information from banks is less common than it once was.

If you’re unsure of exactly how to empower the younger people in your life to be financially literate in our current setting, don’t hesitate to engage in some learning of your own.

That might mean reading blogs or books and familiarizing yourself with new apps and platforms that your child is exposed to. You can also talk to your Entrust Wealth Partners advisor for ideas on how to engage your children on this topic or to ask their advice on financial products or advice you’re unsure of. 

Key Takeaway 

By ensuring the younger generations are financially literate, you’re helping secure a more financially stable future for them and the generations that will follow.

There are several steps you can take in this endeavor. However, should you need advice and assistance navigating these conversations and teachings, Entrust Wealth Partners is here to help. Just contact your advisor or reach out to us at (860) 838-3730 to learn more.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

This material was prepared by Courtney Henry Consulting.