Charity, and apparently, financial literacy begins at home.
A study published January in Social Work Research finds that higher levels of parental teaching of money management in childhood are tied with better mortgage loan performance — including lower levels of delinquencies and foreclosures for low- and moderate-income borrowers in adulthood. The research was led by Washington University in St. Louis researcher Michal Grinstein-Weiss, an associate professor of social work at the Brown School and associate director of the Center for Social Development.
Joe Varghese, financial planner and a manager for Center for Wealth Preservation, an office of Mass Mutual Financial Group, said studies done by Mass Mutual show that close to 80 percent of adults agree it’s important to educate their children, but like many parents, they don’t know how to start.
Varghese, a father of two daughters, said “Thinking about how you will educate your kids about finances will force you to handle your money better.” You can begin teaching kids “as early as possible,” he said. “I believe it starts when kids can understand what a piggy bank is for, usually that starts at age 3 and up.”
Teaching kids good financial skills is sure to pay dividends. Varghese said, “Kids that learn how to allocate what portion of their money to save, spend, invest and what portion to give to charity will have a head start in life. If parents can teach their kids good financial habits, when the child goes to college or starts their first job, they will make good financial decisions. Then when they move to the next stage of life, getting married or buying a home, they will have their debt under control and won’t default on payments.”
Here are some tips Varghese offers on educating kids:
1. Make talking and educating about money fun. For kids who love video games, apps such as “Save! The Game” by Mass Mutual can help your child learn about finances in a fun way.
2. Introduce kids to online activities that teach them the importance of saving, earning, budgeting and charitable giving.
3. Get the child involved in some of your purchasing decisions on a weekly basis. Have the kids help you clip coupons for groceries. The money you save on the item can go in their piggy bank.