A survey by Acorns and CNBC asked American adults who should be responsible for educating children about money. About 83% stated parents should be their child’s primary financial educators. However, when the same groups asked parents how often they spoke with their children about money, nearly 31% said they never had money-focused discussions, and another 24% said they have conversations about money less than once a month.
Part of my role with Habitat for Humanity of Greater Memphis is to partner with prospective homebuyers to review their financial history and help them plan to purchase a home. We often provide debt analysis, general budgeting discussions, and credit counseling. What I’ve found in working with families is that so many of us don’t understand how our holistic financial footprint works. When we don’t know how to untangle the complicated web of our finances, it can feel intimidating to pass information along to our kids.
We added child financial education to our homebuyer education programming two years ago. Children between the ages of 5 and 16 attend classes with their parents and walk away with age-appropriate financial lessons that mirror their parents. Our tandem course creates opportunities for meaningful conversations within family units about money and budgeting while building a foundation for lifelong financial wellness. Along the way, we’ve learned lessons that every parent can apply to conversations with their children about money, no matter their economic background.
Learn, then teach.
One of the best ways to master a topic is to teach it to someone else. Homebuyers walk away from Memphis Habitat Homebuyer Education classes with tangible skills and practices that help them better understand and manage money. While our team teaches children similar lessons, we always encourage adults and children to discuss the topics together. You can build a deeper personal understanding as you explain the concepts to the little people in your life.
In Memphis, dozens of organizations like Memphis Habitat can teach you about financial topics and systems. Credit unions and community banks often have education programs you can join. We recommend searching for “financial literacy programs” or “credit counseling programs” to get started.
Practice together.
Our child-focused financial education materials deliver broad lessons through physical activities. This is an excellent way for children to learn concepts that are challenging to grasp theoretically, but it’s also helpful for adults. For example, our course uses an adaptive budgeting game. At the start of the lesson, we have an income pool that we break into spending categories. Unplanned expenses come up throughout the lesson, and we must adjust our budget and priorities to cover them. This teaches children the value of reserving money for unexpected things and how saving can help ensure they have money to cover essential expenses. You can play similar games at home. For younger kids, you can make budgeting part of pretend play. Children in elementary and middle school can help you build a budget for fun goals – like a birthday party or bike. For teens, create a sample budget to demonstrate how they could use money from a part-time job to build savings and fund activities in their lives.
Loop children in on financial discussions.
We don’t want to pass financial stress to our children, but we can talk with children about our economic circumstances in wise ways to help them understand how money works over time. At Memphis Habitat, we help children create vision boards for their lives, and then we break down how they can work and save toward achieving their goals. You can do the same thing with your family. Set a goal with your children – whether it’s a special dinner out to eat, a swingset purchase for the backyard or a weekend family trip – and create a plan to save for it. You can track progress together and have regular conversations about your spending decisions to help bring you closer to your goal.
Create a plan for more extensive conversations.
Understanding credit management, debt acquisition, and retirement planning takes time and nuance. These are also areas many Americans struggle to navigate as adults. If we want to help the kids in our lives avoid common financial missteps (maybe even missteps we’ve made), we have to create a plan to talk about them. Seek resources from trusted financial institutions, such as banks or credit unions we discussed earlier, to teach teens and young adults about more complicated financial topics. Having these discussions is especially important when you consider that many young people decide to incur student and car loan debt before they leave the house.
Money is a deeply personal topic that many people find difficult to understand. But at Memphis Habitat, we believe that talking about money is a critical step toward financial wellness, including educating children. By breaking down these life lessons for kids, we can help them have a better understanding of and relationships with money, setting them up for success in the future.
Shasta Blue is a mortgage loan specialist at Habitat for Humanity of Greater Memphis. To learn more about the Homebuying Program, visit memphishabitat.com/homebuying-program.