11 Financial Terms for Kids
(and when to discuss them)
It’s almost summer! All around the country, students are planning their newly found free time with activities and summer jobs. There are dozens of subjects and current events they’ve learned over the last school year, but there are simply some skills most schools don’t teach. Financial skills.
It’s hard not to overstate this fact: learning the basics of good finance is just as important as learning “how to solve for x” or what year the Magna Carta was written. That’s because everyone, regardless of who they are or what they want to do for a living, will have to take control of their finances at some point in their life.
A 2015 article in Forbes® magazine by Jennifer Ryan Woods offers this:1
Because most schools aren’t teaching finance, the responsibility falls to parents. But many parents are reluctant to broach the subject, often because they don’t feel qualified or they think talking about money will make their children worry. In a recent study, 72% of parents reported at least some reluctance talking to their kids about finance. But that doesn’t mean they don’t want their kids learning it — 91% believe it’s appropriate for kids to learn about financial matters in school and 75% said there should be a personal finance requirement to graduate.
Until those courses become mainstream curriculum, it will continue to be parents’ responsibility to teach financial skills to their children. Fortunately, it doesn’t have to be difficult. The same article quoted above suggests that simply helping kids understand basic financial terms is a good place to start. You should definitely read the full article, but in the meantime, here are the 11 words mentioned in the article and when to discuss them with your youngsters:1
- Saving (age 4+)
- Budget (age 8)
- Loan (age 8)
- Debt (age 8)
- Interest (age 8-10)
- Credit (age 8-10)
- Taxes (age 10-12)
- Investments (age 10-12)
- Stock (age 12+)
- 401K (age 14+)
- Credit Score (age 15+)
So as your kids, nieces, nephews, grandkids, and all the other generally awesome young people you know head out to earn some cash, remember: Saving can be just as important as science. Budgeting is just as critical as biology. And finance is certainly the equal of learning foreign languages. That’s why teaching basic financial concepts to children is one of the most important gifts any parent can give.
One last thing. At True Wealth, our door is always open to helping educate the next generation on how to pursue financial success. If there’s ever anything we can do to help you pass on the skills you’ve learned, please let us know.
1 Jennifer Ryan Woods, “11 Financial Words All Parents Should Teach Their Kids,” Forbes Magazine, June 8, 2015. http://www.forbes.com/sites/jenniferwoods/2015/06/08/11-financial-words-all-parents-should-teach-their-kids/5/#122578472922