As defined by me, financial literacy is a series of decisions and behaviors, surrounding how one manages financial resources. Being financially literate allows you to make informed decisions about savings and money. However, as a mom, I have learned — and continue to learn — that the behaviors day-to-day are equally as important as the decision-making process itself.
My daughter, Parker, now 5, reminds me often that I must be careful to display behaviors that encourage healthy financial decision-making.
Just under four years ago, I purchased my first home; I was a first-generation homebuyer. At the time, my goal was to secure a stable place for Parker and me, as I transitioned to full-time entrepreneurship. Along the way, I have had the opportunity to share some experiences with her that will impact her long-term, as it relates to finances and decision-making.
The most impactful decision and behavior was that of full-time entrepreneurship. About eight months into living in my new home, I left my corporate job in hopes of scaling a side business I had been involved with for the last seven years.
Primarily I work at home, and to be flexible during the day, I often work at night. When the opportunity arises, I allow Parker to assist me with shipping out books, making deposits at the bank and earn money by helping with these jobs.
Recently, I learned that she has been saving the random dollars in an empty gumball container. Typically, I would not recommend this to my clients. However, it gave me the perfect opportunity to spend a day talking about money in an age-appropriate fashion.
Of course, we needed to count the money, make a budget and deposit our savings. We separated all bills and coins by denominations and added them separately before tallying a total.
This allowed her to have hands-on practice with things she was already learning in school.
When creating a budget, I treated it more like a — another tool she is familiar with from watching me work. I helped her by putting savings as the first item on the list, then I allowed her to pick two things that she wanted to buy.
She understood savings to be money for big fun, like family vacations, and that we should put the most money there. We called the disposable income “fun money” and she was able to make a choice on those items.
When depositing the money, we counted the money a second time. Parker could write in her first and last name, as well as the amount of money she was depositing. This gave her a sense of independence and the desire to visit the bank more often. This helped me realize the importance of including her in conversations and activities about the decisions made surrounding money.
Just like our children pick up on our bad habits, they surely pick up on the good ones. Teaching children about money early on will benefit them. Lessons can start simple and be age-appropriate by using play money and allowing your children to tag along for bank trips.
As they grow older, lessons should include decision-making and incentives. These lessons can prevent intimidation and poor financial decision-making.
Finally, to bring things full circle, I recently sold the first home I purchased for my daughter and me. It is my hope that she remembers us moving from a condo to a house. I know that while she may not understand what it takes at 5 years old when it comes time for her to make big decisions, she will recall these moments and know that she is capable of making the right financial decisions.