PROMOTING FINANCIAL LITERACY IN CHILDREN September 22, 2011 Gayla Randel, Presenter Certified Family and Consumer Sciences (CFCS) BS. Vocational Home Economics Education, KSU MS. Adult, Continuing and Occupational Education, KSU 1 DRAFT COPY

It’s a matter of child development research and practice… Money is tangible, financial literacy is abstract concept. Secret is starting early. Involve children along the way, base their involvement on age. Parents as role model is vital part. 2 DRAFT COPY

Theorists: Jean Piaget “How children understand the world” (how it affects financial ed) Birth- 18 mos/2yrs—Sensori-motor Stage Learns concept of self and can do things for themselves. Learning object permanence (things are there even if you can’t see them) 2-7 yrs—Pre-operational Stage Connects language to objects (money has value) Classification by single factor (money is different and money the same) Only sees things from their point of view (“I don’t have money”) Abstract concepts must be made concrete (see money in jar to save it) 7-11 yrs—Concrete Operational Stage Thinks logically about events (how to spend money) Classification by multiple factors (add up different forms of money) Learns conservation of number (amounts of money can look different) 11 yrs and older—Formal Operational Stage Thinks logically about abstract propositions (saving money can add up) Can grasp the hypothetical (budgeting, save vs spend) 3 DRAFT COPY

Theorists: Erik Erikson “Development is influenced by others around us” 18 mos-3 yrs—(Autonomy) Praise for positive behavior. Provide money to pay for items themselves. 3-5 yrs—(Initative) Role play buying things and paying for things followed by making purchases with own money yrs—(Industry) Influence of peers comes into play. Entrepreneurship or making money introduced yrs—(Identity) Making decisions for self. Provide budgeted amount for shopping, allowing self purchasing. 4 DRAFT COPY

EARLY CHILDHOOD 5 DRAFT COPY

Tips: First concept—Things have financial value. Allow children to pay for small items with money you give them. Monetary symbols—coins, THEN bills (some have more value than others). Identify coins in your wallet Look at coins and how they are different Stack them in groups (e.g. dimes together) Note that children think the bigger the coin, the more value. Move to more complex concepts Savings accounts don’t really get the point across like having a jar where you can see the coins rise. Start the concept of earning money Take children to your bank to show them making deposits with real money. 6 DRAFT COPY

SCHOOL AGE CHILD 7 DRAFT COPY

Tips: Assign home “work” to do to earn money. Simple entrepreneurship projects (lemonade stands). Show kids that once the money is gone, it’s gone. Talk about advertisements and what they are really doing. Explain “why” things wanted aren’t purchased (make it about the money, about the budget, needs before wants). Promote saving part of money earned (introduce donations). Visit banks to start their own accounts (spending as saving). Show them your paper trail and filing system (simple) Set a “price” allowed, so if school-ager wants something more expensive, must earn the money to make the difference. Avoid “purchase first” and then work it off. Allow children to see you paying bills, even if it’s balancing accounts statements or checking online accounts. Role model all financial decisions. Promote role of taking care of property (theirs and others). 8 DRAFT COPY

TEEN YEARS 9 DRAFT COPY

Tips: Encourage part time job, but that education is your job. Involve the teen in the budgeting process. Allow teens to make their own financial purchases…learn from mistakes. Start their own financial file system and how to use it. Avoid bailing them out. Introduce role of credit and loans in adult life. Talk about credit cards (how to use them correctly). Start looking at post-secondary education (tie to financial success). Compare cost of tuition, cost of living, role of scholarships and employment rates. Introduce the idea of taxes and what they are used for. Discuss concept of replacement vs. repair. Garage Sales can allow earning money from what they don’t need any longer and promote recycling concept. 10 DRAFT COPY

NEW ADULT 11 DRAFT COPY

Tips: Talk about your role as a co-signer and your expectations. Role of renters insurance(to protect personal property). Be there to share advice. Be cautious about bailing out. College loans….encourage student loans and responsibility, and not parent loans (they will have 40 yrs to pay off, parents should be saving for retirement). Provide reliable information sources for large purchases and not believe everything on the internet. Share consumer rights and process for identifying when to and how to report concerns. 12 DRAFT COPY

SUMMARY 13 DRAFT COPY

Main Points Role modeling behavior is vital. Include children in financial decisions that affect them at the is age-appropriate level. Promote the fact that money spent is money gone. Allow children to “fail”. That is how we all learn lessons. Don’t be afraid to ask for help if you don’t remember or know what to say. The Women and Money series will share information to assist you. 14 DRAFT COPY

THANK YOU. Gayla Randel, Ed. Program Consultant Family and Consumer Sciences--Kansas State Department of Education 120 SE10th Topeka, KS DRAFT COPY