It’s Financial Literacy Month, Are You Raising Illiterate Kids?

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Bret and Tracie Shroyer, authors of Investing in Your 401k Kid, offer Seven Ways to Teach Kids Financial Literacy.

It’s time that we started focusing on educating our children so they don’t make the same financial mistakes we did.

As Financial Literacy month kicks off, most people are thinking about taxes or are concerned about recent investments. One couple believes you should bring your financial thinking closer to home.

Bret and Tracie Shroyer co-wrote Investing in Your 401k Kid: From Zero to Little Financial Genius in Five Easy Steps.

"All to often as adults we focus on how we will make it to retirement or pay for our kids’ college. It’s time that we started focusing on educating our children so they don’t make the same financial mistakes we did,” says Bret Shroyer. “The truth is this: schools aren't going to teach your kids how to manage money. The best you can hope for is that your kids will learn in school how to identify and count money, and make correct change. This will minimally qualify them for a job at McDonalds someday."

To make sure kids aren’t forgotten this year during Financial Literacy Month, the Shroyers recommend seven ways to teach children to be financially literate.

  •     Start teaching early:

    Kids are ready to learn about the basics of money and saving at two or three years old. It's easy to start with small crackers (Goldfish or Teddy Grahams work well) to teach the idea of saving for a treat later. Once this is established it's a natural transition to move on to small coins, exchanging for those same treats later.

  •     Let kids learn how to buy things for themselves:

Instead of buying children a treat or a small toy, try giving the child some money and help them negotiate the purchase at the register. This reinforces the idea that paper money - a rather strange and abstract idea - can be exchanged for real-world tangible goods

  •     Don't tie kids' allowance to chores:

    Some parents "pay" their kids for doing their fair share of the work around the house. This has the potential to negate an important strategy in teaching kids financial savvy: the concept that responsible behavior is rewarded with greater freedom. To do this, make an allowance into tool used to teach kids how to manage and spend money.

  •     Help kids learn how to make choices within a limited budget:

    There's not always enough money in the family budget for soccer, dance lessons, ski trips, and karate. Every family has a reasonable budget for kids' activities. By discussing the realities of this budget with the child, she can learn how much these activities cost, and decide for herself which are most important to her and also which fit into the overall budget.

  •     Talk frankly and openly to kids about money and debt:

    Kids aren't learning about financial responsibility in school. They're learning how to count money, and maybe some accounting - but they're not learning about debt, budgeting, and responsible saving. Having frank discussions with kids about family finances - including income, taxes, insurance, auto and mortgage debt, helps kids understand the "big picture" of family finance.

  •     Enforce kids' long-term savings:

    Even from a young age, kids should be saving a portion of every dollar they're given as gifts, or receive as allowance, in a long-term savings account. They should be able to see this money growing over time, and should have a goal in mind. Saving for a computer, a ski trip, or a used car are all multi-year goals.

  •     Don't bail kids out when they're about to make a mistake:

    The best way to learn financial responsibility is to make a lot of mistakes -- and learn from them. Kids won’t learn from the mistakes their parents stepped in and prevented. That said, it's best to make those mistakes while they're still young - and the mistakes cost very little - rather than when you're older, and the mistakes are very expensive.

Investing in Your 401k Kid: From Zero to Little Financial Genius in Five Easy Steps includes real life tales of the trials and mistakes the Shroyers faced with their own kids when they placed all three of them on full-fledged budgets at 7 & 8 years old. The book gives parents the tools and techniques for teaching children as young as three the skills they need to manage their own money. Worksheets, sidebars and access to an online planning spreadsheet make the book both useful and practical. For more information, go to or

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