Here are some financial lessons kids should be learning about in school.
While most kids know that 2+2 = 4, if you ask them to balance a checkbook you might get a few blank stares. The first concept that schools should teach kids is that expenses should not outstrip income. In other words, kids need to understand the concept of only spending what you actually have. Kids should learn about budgeting, distinguishing between needs and wants, saving for a goal, and living within their means. Many kids get their first credit card in college, but some still think of it as free money. This is often a problem with using credit cards instead of cash.
With credit cards, you don’t see anything leaving your wallet or bank account, whereas with cash, you only have so much in your wallet to spend. Kids should learn how to calculate credit card interest before college. Being aware that if you don’t pay the amount you owe, you have to pay an extra fee is an important concept for kids to understand.
They should also learn how interest rates affect mortgage and car loan payments. Whether your child is earning money from babysitting or washing cars, they should be learning how to invest it. One way they can begin saving and investing their money is that kids can contribute to a Roth IRA, as long as it’s managed by an adult.
You can open a family account on investing sites like Motif and build a portfolio with your child.
