Financial Literacy: It's Not What You Think

by Lisa McCarthy

financial literacyApril is financial literacy month! Financially literacy is one of the most important life lessons that you can teach your children, but my child is only four. It's not time to start talking about money yet is it? The answer is yes. Three to four years of age is the perfect time to start children on their road to being personally, financially responsible. Okay, so I hear you laughing -- but please read on.

Financial literacy is not what you think. As I go around doing book signings and events for my latest children's book, "The Money Tree," I find that most parents really don't get what financial literacy is all about. They think financial literacy is about teaching kids how to write a check, balance a budget or invest money. But that is just a small part of what financial literacy is really all about. In this instance, three or four-years-old is a little young to start these lessons.

Financial literacy for young children is teaching them about the role money plays in our lives. It is about teaching them to form a good healthy attitude about money and one they will probably carry with them most of their lives. At a young age, it is really about the basics: you need to work to make money; you need to save it and spend it wisely.

So how do you explain that to four, five or six-year-olds? It's really simple. As parents it's really a game of show and tell. Every day things can turn into a money lesson. For example, trips to the store, a bank, saving for a family vacation and even a meltdown over a toy they want in a store are all perfect opportunities to discuss, explain and show them the basics.

We are not talking Math 101-- we are talking about discussing how money is made, showing them how you spend it wisely, and what you are going to cut back in order to save for that great summer vacation.

Numerous studies have shown that most children, who have a good healthy attitude about money and material things, grow into financially responsible adults. Isn't that what we all really want for our children?

When I started writing children's books about money, it was for a selfish reason. I had a child who I realized at four years old really did believe that money grew on trees. I was raising an entitled child, and I knew that this was not the adult I wanted her to become. But she was so cute, and like most parents, I wanted to give her the world.

Her first major temper tantrum in a store over a toy I would not buy changed all that. It made me re-evaluate what I was teaching her about how you get things. So we started talking about wants vs. needs, what things costs and how to save money. I showed her in everyday life just what that meant. Trips to the grocery store turn into adventures in how to save and spend wisely. An old water bottle turned into a bank to save for something she really wanted.

Over the years, these small lessons became a part of our life. Raising a money-smart kid became natural in our conversations and routine. The really cool thing about it was not only was she becoming money-smart, I was becoming a money-smart parent, too! Like most parents, you have those special "ah ha" moments that bring a tear to your eye and a smile to the face. I had one a few weeks ago.

We were in the car discussing a friend of hers who got an iPhone. My daughter, who's now 11, looked at me and said, "You know Mom, getting something you love, like my puppy and my bunny, is really better than getting a thing like an iPhone." And that's when I smiled and knew -- I was not only raising a money-smart kid, but a wise one too.

Lisa McCarthyLisa Laughton McCarthy is a mom with a passion! As the founder of MoneySmartKidz and author of "The Money Tree," Lisa, takes delight in finding fun creative ways to help show young children the value of financial independence! Her first book "The Money Tree," with its eye catching illustrations, is the answer to every parent who wants to give their child a head start on the road to financial independence.

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