Experts say that among the many things parents can teach their children, financial literacy has been proven to be an essential skill. According to a survey conducted by Bankrate on February 24, children who receive good financial education while growing up are more likely to earn higher salaries, have better credit, stronger negotiation skills, and develop habits of saving for the future.
“You are more likely to succeed in adulthood if you have been exposed to financial education early in life,” Alex Gailey, a data analyst at Bankrate, told The Epoch Times. “This does not mean that those without this education are doomed; it’s never too late to start learning.”
Data shows that children who receive early financial responsibility education tend to reap rewards in adulthood. The survey revealed that Americans who grew up in a sound financial literacy environment are 1.5 times more likely to successfully negotiate a pay raise compared to those who did not have financial education. Among the surveyed individuals, 66% of those raised in a financially literate environment claimed to have negotiated a pay raise, while only 39% of those without financial education did so.
Additionally, 49% of individuals who grew up with good financial education set budgets for personal expenses, and 57% saved for the future. In contrast, only 32% of those without financial education set budgets, and 43% saved for the future.
Overall, the survey found that 50% of males stated that they had financial literacy knowledge while growing up, compared to 42% of females.
“Teaching children financial literacy is like giving them a compass for life,” said Connor Boyack, author and founder of Libertas Network, an advocacy group for families. “It’s not just about money; it’s about understanding trade-offs, delayed gratification, and personal responsibility.”
Boyack created a book series called “Tuttle Twins” to educate children about financial matters, including more complex concepts like inflation and investments. He mentioned, “We have seen that even five-year-olds can grasp these concepts through stories, laying the groundwork for them to thrive in the free world shaped by their financial decisions.”
Other elements of financial literacy include having a paying job, earning pocket money through chores, learning personal finance in school, investing in stocks and bonds, managing bank accounts, budgeting for major future expenses, repaying debts with their money, or simply discussing money matters with parents, according to Bankrate.
Financial literacy can also help children avoid pitfalls in the future, such as accumulating credit card debt (often with interest rates exceeding 20%) or taking out payday loans with interest rates as high as 400%. Additionally, developing the habit of paying bills on time can boost credit scores, enabling individuals to obtain mortgages, auto loans, and car insurance at lower rates.
“Since schools do not systematically teach financial literacy, it is crucial for parents to discuss money with their children from a young age,” Gailey advised. She suggested using real-life events as teaching moments, such as when shopping with children at the grocery store.
“Rather than having your children just follow you around without paying attention to what you are doing, seize that moment to teach them why you are buying specific items, how these items fit into your budget, or even give them the task of choosing between two similar items and ask them why they chose that one,” Gailey explained.
Other financial education tools for children include Ramsey Solutions’ “Smart Money Smart Kids” program, “High School MBA” operated by John Rock Foster, and the Youth Achievement Program.
“Even if you do not use a particular company’s product, having open and relevant money discussions with your children can have an impact,” Boyack said. He noted that many young people in recent years have not been taught the value of personal responsibility, such as the recent efforts to forgive student loans.
“The message of loan forgiveness is telling them the opposite; someone else will clean up your mess,” Boyack said. “Real responsibility comes from owning your choices, not shirking responsibility, and children need to learn this lesson early rather than trying to unlearn it later.”
In addition to learning personal responsibility, understanding how to make wise money choices seems to be linked to higher salaries as children grow into their careers, Gailey said. Negotiation involves not just asking for more money but evaluating your relative value, and proving to employers why hiring you or paying you more benefits them.
“When you have had exposure to financial education at a young age, you are more likely to have financial confidence in adulthood, which can translate into more successful negotiation outcomes,” she concluded.