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The events of the last year have had a financial impact on families across our country, regardless of income. The Bureau of Labor reported a 6.7 percent unemployment rate in December, and The Commonwealth Fund estimates that 7.7 million people lost their jobs between March and June. CNBC reported in September that 60% of businesses that temporarily closed because of COVID restrictions are now permanently closed. And according to The Brookings Institution, one in five people were behind on their rent in 26 states.
Although these problems can’t be fixed overnight, Young Americans Center for Financial Education has a suggestion that we think will help families in the long-term: why not make 2021 the year you talk about money with your kids?
Experts agree that bringing up finances at home can have a big impact. Our own Rich Martinez, President and CEO of Young Americans for the last 23 years, synthesizes the argument this way: “When kids start learning about money at a young age, they have time to develop healthy financial habits that will last well until adulthood.” Even preschool-aged children can understand that money has value, so that’s a good time to start.
Daily or weekly “teachable moments” help children understand age-appropriate money topics. For example, young children can compare prices in a store or online, elementary-aged children can understand what happens when you swipe a debit or credit card to make a purchase, and parents can involve teenagers in larger purchasing decisions, say a car or a house, to help them understand loans and interest rates.
If you are reluctant to bring up money at the dinner table, you’re not alone. A December survey conducted by T. Rowe Price reported that 85% of parents think it’s important to talk about finances with their children, but 41% are reluctant to do so. However, the benefits of starting these conversations outweigh the discomfort. Helping your first grader learn and experience the concept of delayed gratification is much easier than helping your high school freshman.
Plus, Young Americans is here to help! Besides housing the world’s only bank specifically designed for kids, we also offer classes, camps, and programs that teach financial concepts in a fun, hands-on way. As a parent myself, I particularly appreciate that classes provide age-appropriate conversation starters for my children. For example, my four-year-old can start to understand the difference between wants and needs, and so we can talk about why we buy milk at the grocery store and not toys.
Having conversations about finance as a family doesn’t have to be stressful, and it can have a big impact: you’re helping your children be financially independent some day. Start young and start this year!