Kids and Finances (Part 2)

As children age, the lessons they should be taught about finances become more complicated. Many adults could use some education, as well, since money is not necessarily something their parents discussed with them. Parents should start age-appropriate dialogues with children about being financially responsible as young as 3 years old.

The President's Advisory Council on Financial Capability (PACFC) developed a website named Money as You Grow. The site provides 20 essential, age-appropriate financial lessons and includes corresponding activities for each age. One of the main objectives of the PACFC is to find ways to improve the financial capability of younger Americans.

Last week, a summary of what 3-13 year old children should be taught was provided. Some of the lessons for 14 year old children and up are below:

14-18 YEARS OLD

• When comparing colleges, be sure to consider how much each school will cost.
• Avoid using credit cards to purchase things that cannot be afforded with cash.
• Money is taken out of paychecks for taxes, so they may appear smaller than expected.
• Save and invest money in investments like a Roth IRA.

18 YEARS OLD and up

• Credit cards should only be used IF they can be paid in full each month.
• Health insurance is a necessity.
• Save at least 3 months of living expenses in case of an emergency.
• When investing, consider the risks and annual expenses.

These are important lessons for everyone. The earlier people are taught about how money works, the better chance they will have for a healthier financial future.

The President's Advisory Council on Financial Capability (PACFC) was created by an Executive Order that was signed on January 29, 2010. The purpose of the website is to inspire families, community organizations, nonprofits, and businesses to embrace Money as You Grow as a tool to promote financial literacy. The website serves as a guide to learning about and using Money as You Grow. It is intended for reference only, and is not meant to endorse or promote specific initiatives.