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<img loading="" class="lazyload size-article_feature" data-sizes="auto" alt="From elementary school through high school, the key subjects kids learn are reading, writing, and arithmetic, but should schools and parents make room for some lessons about money?

Research from Youth.gov indicates that financial education for young people under the age of 18 leaves a lot to be desired.

High school seniors scored just 48% on average on a financial literacy exam, and Youth.gov reports a discrepancy in what adults think youth should know and what financial knowledge is considered valuable to young people.

Currently, only 21 states require personal finance education in schools, and of those schools, only six require a standalone course, based on research from the Council for Economic Education, a financial education organization.

But according to Tanya Van Court, a former Nickelodeon and ESPN executive and the founder of GoalSetter, a savings app for families, financial education is necessary for children as young as 5 years old. This is especially true, Van Court says, as the economy reels from the financial ramifications of the coronavirus pandemic. Unfortunately, lack of devoted financial education can set young people up to fail later in life.

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“We are literally preparing our kids to grow up, to be adults, who are living check to check, who are not financially literate, who are financially irresponsible because they haven’t gotten those lessons early on,” Van Court said.

In order to avoid that outcome, Van Court says, children should learn about different aspects of having and managing money from the age of 5 to 18 inside and outside of school. Here are the key money concepts parents can make sure kids learn whether they’re in kindergarten or on their way to college.” title=”From elementary school through high school, the key subjects kids learn are reading, writing, and arithmetic, but should schools and parents make room for some lessons about money?

Research from Youth.gov indicates that financial education for young people under the age of 18 leaves a lot to be desired.

High school seniors scored just 48% on average on a financial literacy exam, and Youth.gov reports a discrepancy in what adults think youth should know and what financial knowledge is considered valuable to young people.

Currently, only 21 states require personal finance education in schools, and of those schools, only six require a standalone course, based on research from the Council for Economic Education, a financial education organization.

But according to Tanya Van Court, a former Nickelodeon and ESPN executive and the founder of GoalSetter, a savings app for families, financial education is necessary for children as young as 5 years old. This is especially true, Van Court says, as the economy reels from the financial ramifications of the coronavirus pandemic. Unfortunately, lack of devoted financial education can set young people up to fail later in life.

“We are literally preparing our kids to grow up, to be adults, who are living check to check, who are not financially literate, who are financially irresponsible because they haven’t gotten those lessons early on,” Van Court said.

In order to avoid that outcome, Van Court says, children should learn about different aspects of having and managing money from the age of 5 to 18 inside and outside of school. Here are the key money concepts parents can make sure kids learn whether they’re in kindergarten or on their way to college.” src=”/wp-content/uploads/migration/2020/07/20/6VQZEMSARBHCTAB364VEOCQGJE.jpg”>

From elementary school through high school, the key subjects kids learn are reading, writing, and arithmetic, but should schools and parents make room for some lessons about money?

Research from Youth.gov indicates that financial education for young people under the age of 18 leaves a lot to be desired.

High school seniors scored just 48% on average on a financial literacy exam, and Youth.gov reports a discrepancy in what adults think youth should know and what financial knowledge is considered valuable to young people.

Currently, only 21 states require personal finance education in schools, and of those schools, only six require a standalone course, based on research from the Council for Economic Education, a financial education organization.

But according to Tanya Van Court, a former Nickelodeon and ESPN executive and the founder of GoalSetter, a savings app for families, financial education is necessary for children as young as 5 years old. This is especially true, Van Court says, as the economy reels from the financial ramifications of the coronavirus pandemic. Unfortunately, lack of devoted financial education can set young people up to fail later in life.

“We are literally preparing our kids to grow up, to be adults, who are living check to check, who are not financially literate, who are financially irresponsible because they haven’t gotten those lessons early on,” Van Court said.

In order to avoid that outcome, Van Court says, children should learn about different aspects of having and managing money from the age of 5 to 18 inside and outside of school. Here are the key money concepts parents can make sure kids learn whether they’re in kindergarten or on their way to college.

Van Court says at 5 years old children should learn the basic function and purpose of money. “They learn that you can use money to buy things … that if you have money in your hand you can go into a store and exchange it for what you want,” Van Court says.
“Different things cost different amounts. So you have to have a certain amount of money to buy a certain thing, a different amount of money to buy a different thing and they can learn that at 5 years old,” Van Court says.
As a child gets older, they have to become aware that money runs out. “(Y)ou can buy many things, but you can’t buy everything. So, at 6 years old they start to realize that money is finite when they walk into a store,” Van Court says.
The idea that money runs out, Van Court says, should motivate children to separate their desired purchases into “needs vs. wants.” “If you can’t buy everything then you’ve got to determine what are the things that you are going to buy based on what you need (or) what you want. … And what you need this week, or what you have money for this week, as opposed to what you’ve got to wait for until next week because you don’t have money for it,” Van Court says.
By 7, money as payment for a service should be part of a child’s reality. “The lesson is, you can buy more things if you work for them,” Van court says. “(S)o (at) 7 years old, that’s when you teach them the value of hard work, earning money doing more things around the house.”
Van Court says working for an allowance should extend beyond basic required chores and into kids identifying other ways to use their skills to generate income. “How can you find things to do? How can you develop skills that are valuable to people? So, if you’re the best one who sweeps the stairs or you’re the best one who cleans the bathroom, that’s a valuable skill in mom’s household,” Van Court says.
Van Court says 8 years old is around the age children start to want more expensive items, creating a perfect segue for learning about saving and creating goals. “They’re starting to want an iPad, they’re starting to want electronics and bigger ticket items and so that’s when they can really understand the power of saving.” Van Court says.
The central idea of learning about saving is the idea of delayed gratification. “You can buy bigger things if you wait for them. So at 8, you can teach them that saving and delayed gratification are really important to get the things that you really want,” Van Court says.
Nine years old, according to Van Court, is the prime age to start learning about using money to help others. “At 9 years old, that’s when they start to really understand their place in a larger world. And so the lesson I really like to focus on there is — it doesn’t feel so good buying everything you want if other kids can’t even buy enough food to eat,” Van Court says.
Van Court says: “Sharing becomes a really important lesson to learn early in life because if you develop that muscle in them early in life, it’s who they’ll be later, they’ll always think about their money as, ‘Yes I can go and spend all of my money on things that I want, but it probably is really important to share some money with others who are in need.'”
By 10 years old, Van Court says, the conversation shifts to be about more advanced financial topics like investing. “You teach them about investment accounts, you teach them about interest, you teach them about compound interest because the only way our kids are going to build wealth and truly have choices in society and freedom is if they are investors. You can’t save your way to wealth,” Van Court says. While budgeting alone isn’t the key to wealth, Van Court says stressing the importance of investing will place an appropriate amount of emphasis on budgeting.
Van Court says when you start lessons about investing, you should also begin lessons in investing concepts, like compound interest. Investopedia defines compound interest as “interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.” For example, if a child invests $100 at 5% compound interest annually, they will earn $5 on their investment the first year, $5.25 the second year and $5.51 their third year, for a total of $15.76 over three years. Investopedia notes this number will increase with each year.
Budgeting is not the secret to building wealth alone. But, as Van Court points out, “(B)udgeting is an important first step to building wealth.” Encouraging budgeting to allow kids to have more money to invest and grow is crucial at this age.
Building on the previous principles of investment, children at 12 years of age should start understanding the need to save money so they have more capital to invest. “Twelve years old, the more money you spend, the less money you have to invest and grow.”
The lesson reserved for older teenagers, and, Van Court says, the last lesson to learn before college and adulthood is the healthiest way to use credit cards. “The more credit you have, the further you are from being rich,” Van Court says.
By 16, teens should know the dangers of running up a huge balance on credit cards without being able to pay it back. “(I)f you go on a $2,500 vacation, and you are paying a minimum payment on that credit card, you will be tied to that credit card for 10 years,” Van Court says adding, “You should have the conversation with them at the same time of, ‘Look, credit cards are great to establish credit, you just have to use them responsibly.’ Responsibly is only (using) a credit card when you’ve got enough money to pay it off at the end of the month.”