Financial Literacy for Kids: What Are the Key Elements?

There is a logical sequence in what kids need to know for their financial education. Of course, knowing about money is what it’s all about. But in what order do kids need to know things about money?

Albuquerque, NM (PRWEB) October 20, 2006 -- There is a logical sequence in what kids need to know for their financial education. Of course, knowing about money is what it’s all about. But in what order do kids need to know things about money?

The sequence is as follows: Recognizing money and its use; knowing where money comes from and where it goes; understanding risk, savings, and interest; how to make the best personal choices with money; and the ethical dimension to financial decisions.

The first steps begin with toddlers, teaching them about bills and coins. Preschool children can start to recognize how things are paid, whether it is cash, check, or credit card. They also are very observant about ATMs and believe that all parents need to do to get money is “go get some at the ATM.” This can lead to a discussion of how money is earned, and every child needs to learn how to earn money as soon as they are aware of the concept of earning money and its consequences.

Parents need to spent some time talking to their children about where money goes in the family, otherwise kids have no clue that there are expenses such as utilities, insurance, car payments, and mortgages. Kids should be taught the value of a budget early, and also taught to choose between what is “needed” and what is just “wanted.” Older children need to be taught about risk vs. reward, compound interest, and the ethical consequences to their choices of earning and spending money.

These elements of financial education and more are discussed in the book “DollarSmart Resource Guide for Kids” (http://www.dollarsmartbooks.com)which is a comprehensive financial education guide for parents and teachers.

Author Cheryl Gorder has been on the cutting edge of spotting trends for twenty years. In 1985, she was a pioneer in the homeschooling movement, which in that year had only 25,000 people involved. Her efforts to promote homeschooling helped the trend grow to millions of people nationwide. She wrote the bestselling books "Home Schools: An Alternative" and "Home Education Resource Guide," both of which were Small Press Bestsellers for ten consecutive years. She has received numerous awards for publishing, including the prestigious Benjamin Franklin award and was runner-up for Small Press Publisher of the Year.

For information contact:

Cheryl Gorder,

(505) 681-2880

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