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Today is Teach Children to Save Day, a national program that organizes bankers who are willing to volunteer and to teach children about the importance of saving early on in life. This program has been going on since 1997 and has helped over 6 million students develop good saving habits early in life.
Saving early is essential to having a successful, debt-free life upon entering adulthood. Members of the class of 2011 graduated with an average of $26,000 in student loan debt. Had they saved or invested, I’m confident that number would be much lower. The general population believes financial education is becoming increasingly important, bordering detrimental to the future of our country, however, only 56% of teens plan to save some of their income, down from 89% in 2011. It’s important for kids to learn and understand the concept of saving while young because that’s when habits are formed that last a lifetime.
In part one of this series, let’s take a look at what children in grades K-4 are capable of learning and what parents can do to help. We will visit older age groups on the second and third part of this series.
National Standards for Saving & Investing
As a parent, you may be uncertain what your child is cognitively capable of learning and understanding at their age. There are national standards in financial literacy as determined by the Council for Economic Education and, according to their website, those who complete school through the fourth grade should know the following about saving and investing:
- Income is saved, spent on goods and services, or used to pay taxes
- When people save, they give up the opportunity to buy now in order to buy things later
- People can choose to save in many places like a credit union, a piggy bank at home, savings account, or at a commercial bank
- People set savings goals as an incentive to save
- A savings plan helps people reach their savings goals
- People will often deposit money into a financial institution because the bank pays them interest. Banks attract savings by paying interest, and people place their money in banks to keep it safe.
JumpStart, a non-profit organization that’s partnered with approximately 150 national organizations, also has a set of national standards in personal finance education. By the time children finish the 4th grade, they should be able to do the following:
- Describe advantages and disadvantages of saving for a short-term goal
- Describe advantages and disadvantages investing money with a financial institution
- Describe how people can cut expenses to save more of their income
- Give an example of an investment and how it can grow in value
- Give an example of an investment that allows relatively quick and easy access to funds
- Compare the main features of interest-earning accounts at local financial institutions
- Compare the rates of return on basic savings accounts at different financial institutions
Saving & Investing Resources K-4th
When subjects aren’t being covered in school due to budget cuts, staff, or other conflicting items, it’s up to you, the parent, to step up and make sure your child is getting the proper education they need. Here are 10 resources parents can use to teach their children before entering 5th grade about saving and investing, based off the national standards explained above.
Needs vs Wants Coloring Sheets –This is a fun, short activity you could do with young children. This 2-page coloring sheet gives examples of needs vs wants and is free to print out.
Financial Fitness for Life –This is a storybook designed to measure the child’s progress in four themes of personal finance such as earning an income, saving, spending and credit, and money management. There are 16 lessons and the cost is $14.95, which includes exercises, a book, access to a partner resource site online, and some other related materials.
What Money Can Do –This lesson plan can be used by both parents and teachers and will introduce the child to money and covers what it is, its value, how we use money, where to store money, and the concept of saving. This material is free to download, comes with kid-friendly pictures and also comes with a short quiz with an answer guide.
A Chair for my Mother –This lesson is for those in grades 1st-3rd, and is supplemental to the book, “A Chair for Mother” by Vera B. Williams. If you don’t already own this book, you may listen to it and watch it with your child via YouTube. After the story is over, you will ask the list of questions supplied and help your child work through two activities that you will first need to print out (4 pages).
Why We Save –This resource includes a story about a little girl, Penny, and her thought process when deciding whether she should spend or save her money. This activity is free to download, comes with a list of follow-up questions, and you will need paper and scissors (unless you use real coins). This activity will need to be tweaked a bit if you are only using this with one child since there are some group-related questions.
3rd & 4th Grade
Financial Fitness for Life – Similar to the K-2 version, this is a storybook designed to measure the child’s progress in four themes of personal finance such as earning an income, saving, spending and credit, and money management. There are 16 lessons and the cost is $14.95, which includes exercises, a book, access to a partner resource site online, and some other related materials. *Note* This resource is for those in grade 3-5, so make sure you aren’t going over the information geared towards 5th graders, unless you feel your 4th grader is able to learn the material.
Money in the Real World – This lesson plan can be used by both parents and teachers and will introduce the child to some deeper concepts related to money such as creating a budget, needs vs wants, how money works, and introduces the concepts of taxes, inflation, interest rates and loans. This resource is free to download, comes with kid-friendly pictures and also comes with a short quiz with an answer guide.
Bank Scavenger Hunt –Print out this free worksheet the next time you go to the bank with your child. This will keep them busy while you do what you need to do and your child will start to become familiar with the items found in a bank and why they are there.
Kids & Cash –This lesson goes over banking and financial services such as interest, borrowing and saving. You will go over the scenarios of two individuals and how using different banks will earn you different amounts. Only use pages 1-3 for this activity, free to download or print. *Note* This resource is for those in grade 3-5, so make sure you aren’t going over the information geared towards 5th graders, unless you feel your 4th grader is able to learn the material.
How Money Can Grow –This lesson will teach your child different ways to save money and the benefits of doing so. This lesson requires some mathematics. Read the story or have your child read “How Money Can Grow” and then have your child answer the attached questions. Use this resource as another supplemental activity to teach your 4th grader even more about interest rates, compound interest, and how different institutions have different rates. You will need to call around to get the varying rates for your child.
For parents with older children be on the look-out for our next article of standards and resources to use for those in grades 5-8.
Kari Luckett writes about financial topics for CompareCards.com and is the content strategist for CompareCards.com. Kari is the lead writer for myFICO Kids, a column focusing on teaching children about smart financial habits.