Author: Vince Sullivan, Director, NEST 529 Direct Plan, First National Bank of Omaha
When it comes to college savings, financial literacy is an integral part of the journey. By choosing NEST 529, Account Owners have already proven that they’re financially savvy – now it’s time to get the kids involved. In honor of Financial Literacy Month, we’re highlighting some impactful ways for parents to get kids excited about enhancing their financial skills.
Supplement school lessons with real-world examples
At some point, every student has asked themselves: When am I going to use the stuff I’m learning in school? Kids may not see it now, but their math lessons are laying a foundation for decades of financial literacy. As a parent, all you have to do is show them how.
Math and money are everywhere, and the more you look, the more you’ll find real-world opportunities for kids to use the lessons they’re learning in school. At the grocery store, young children can practice their counting skills, and older children can help divide up money, compare prices, calculate coupon savings and more. Teens can even do some grocery shopping on their own, implementing a range of math skills to stay on, or even under, budget.
At cafés and restaurants, the extras at the end of a bill can serve as an introduction to salaries and taxes. Older kids can practice addition, percentages and fractions by adding up items on the bill, estimating tip or calculating the sales tax rate.
In each instance, taking a moment to explain how these everyday activities translate to the real world can greatly enhance kids’ engagement both with the subjects that they’re studying in school and with the topic of financial literacy.
Create opportunities for practice and independence
When teens and young adults live on their own for the first time, they’re confronted with new financial responsibilities. You can’t foresee every challenge that your child will face – but you can help them prepare for financial independence before they leave home.
Learning to budget and manage your own money is a critical skill. Opening a checking and savings account with your child will introduce them to the basics of banking, and give them a personal stake in the process. Through babysitting or tutoring, middle schoolers can contribute to these accounts – gaining early experience with saving and spending on their own. Later on, with a summer or after school job, older kids can get a first glimpse at working life and filing taxes, as well as budgeting and saving with greater sums.
Even younger children have opportunities to dip a toe into financial independence. Encourage them to save up their allowance for a new toy, build a shopping list and budget for a family dinner or practice their skills with one of these fun and kid-friendly apps. And of course, keep an eye out for NEST 529 scholarships, like our current NEST on the Farm Drawing, which are great opportunities for kids and parents to work together to save for college.
Lead by example
Parents are the ultimate role models, and financial literacy is no exception. Sharing your day-to-day responsibilities and expenses with your child is one of the best ways to promote financial skills and awareness.
On a monthly basis, encourage kids to help you track restaurant, grocery or gas expenses for the family. Explain to them why you sometimes use a credit card, and sometimes use cash. During tax season, show them some of the documents that you use, and give them yearly updates on how much you have saved for their higher education.
Sharing your current savings goals with your child is an effective and rewarding way to promote financial literacy. Defining your goals for the future, and your plans for how to get there, will go a long way toward teaching a child about financial priorities, budgeting and goal-setting. With your NEST 529 account you can also teach your child about interest, investing, and the investment markets.
The list of the many lessons which can be taught with math, numbers, and dollars and cents goes on. In fact, most of your day-to-day financial decisions, though mundane to you, can be engaging learning opportunities for your child. Through transparency, creativity and conversation, financial literacy is a goal that you and your child can achieve together.