Parents often hear that children should be given a more comprehensive financial education earlier on to better prepare them for their future — but literacy in matters of personal economics can be hard enough for adults.
KPBS Midday Edition spoke to Gregg Murset, a certified financial planner and the CEO of BusyKid, a for-pay subscription service that offers children and youths practice with saving, investing and spending.
How early should children start learning about money?
“Parents need to be the ones that kind of take charge here because they're the ones with the money,” Murset said. “And the real lessons in life when it comes to money are learned by doing this stuff — not necessarily studying it.”
Murset said children could begin learning concepts of financial literacy — from earning money to managing money — as young as 5 years old. “These are difficult concepts,” he said. “And they take time.” But, he added, “if they learn early, it really sticks.”
Is a 'piggy bank' still relevant?
However parents might have learned their own financial literacy, Murset said, the current generation of children are more likely to grasp such concepts through digital tools.
“Throw all that old school stuff away: Take the piggy bank and the envelopes and all that stuff — throw it out the window and use technology, because kids get technology,” he said. “They're good at it, and it speaks to them. So let them use it. You know, there's a lot of things they use technology for that probably are a money and a time-waster; let's use something, let's use technology for a good reason.”
But how do parents make financial literacy engaging for kids?
Murset said an effective tool for teaching children about financial literacy was to show them that earning money and spending it wisely is in their own interest.
“The next time they want something really bad,” he said, “is a perfect opportunity to say: ‘Hey, I think that's awesome that you want that scooter or that dress or that whatever — and knock yourself out. Imagine all the money you can make by cleaning our house, washing our dog, or doing all these things like that would be wonderful. Once you earn the money, you can go out and you can go buy it.’”
What shouldn't parents do when teaching kids about financial literacy?
Murset said making financial literacy concepts such as investments boring could work against parents.
“Let them invest in something that they think is cool or that they have interest in,” he said. “Don't force them to go invest in some company or fund that they just have zero interest in because it's not going to be something that they stay with.”
Why does teaching financial literacy matter?
Murset said one of the biggest rewards of teaching children about financial literacy was that they will be more independent as adults.
“You only get them for a little bit, and you’ve got to really make the most of the time that you have,” he said. “But, at the end of the day, they're going to be making financial decisions every single day of their life. And so you might as well start them early, get them practicing so they can leave your nest and never come back. Except to visit.”
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Alexander Nguyen/KPBSDeveloping a better understanding of your own finances may be hard, but it's not impossible.
