Daniel T. Lerner

Daniel T. Lerner joined the David Lerner Associate firm in 1991 as an investment counselor and was then promoted to Executive Vice President of Investor Services in 2013. In the following article, Daniel Lerner and David Lerner Associates provides insight into the importance of educating children in the world of finance, and the various age-related methods for teaching kids about money.

Financial literacy — the ability to make responsible money decisions during everyday life — should be taught in schools. And since most establishments don’t provide a comprehensive look at such matters, it falls to the parents and guardians of children and teenagers to fill this educational gap. Understanding how to handle money from a young age is an important skill for success as they grow.

Daniel T. Lerner says that with the right financial education, children hold promise for an economically stable future. And there are plenty of research-backed methods parents can use to get them on the right monetary path.

Bringing Financial Literacy to Children and Teenagers

Daniel Todd Lerner reports that effective money management demands a plethora of skills, including basic math, understanding interest, and emotional regulation to avoid impulsive financial decisions. Its importance is unparalleled.

According to a recent CBI Economics analysis, financial literacy can raise early career earnings by up to 28%. Not to mention that young people with an all-around monetary education have higher chances of starting a business.

But perhaps more interestingly, studies show that by age 3, children can grasp basic financial concepts and money habits are established by the age of seven. By this point, they’ve formed the foundation of financially influential behaviors that affect decision-making for life.

As the world becomes increasingly more complicated, the economic arena keeps pace, bolstering the importance of providing children with a robust financial education. Teaching core components reduces the likelihood of problematic debt, boosts solvency, and helps them plan appropriately for the future.

But naturally, experts mention such lessons vary based on the age of the child.

Methods for Teaching Kindergartners About Money

Despite kindergartners’ tender age, parents have a few tools at their disposal to begin teaching the basics of real-world finances.

While piggy banks have always been a popular choice, it isn’t quite in-depth enough to transfer to everyday life. Instead, parents should try:

Setting Examples

Research shows money habits are formed before the teen years — and kids are constantly watching parents’ money movements, including arguments and overspending. Setting healthy examples give children a good basis to work from.

Showing That Things Cost Money

Showing rather than telling is most educators’ core adage. And it applies to finances too.
Telling children, “This toy costs $5,” isn’t as beneficial as helping them take a few dollars to the store and handing it to the cashier. While simple, it has a much larger impact.

Teaching Elementary Students and Middle Schoolers About Finances

As children age, Daniel Todd Lerner says that their financial education can grow too, giving guardians and parents more scope for their real-world lessons.

Understanding the Opportunity Cost

By middle school age, children should be able to weigh decisions and determine possible outcomes. For instance, helping them understand that buying a video game means they can’t purchase the new shoes they want. Opportunity cost is one of the most crucial factors of financial literacy.

Daniel Todd LernerAvoiding Impulse Purchases

Children are great at leveraging their parents’ money for impulse purchases, especially at the grocery store. While it’s easy to give in, letting them know they can use their money to purchase it will often dampen the flames.

That said, many experts encourage parents to suggest their children wait to buy anything over $15. It’ll likely remain at the store, allowing them to make a clear-headed decision the next day.

Boosting Teenagers’ Economic Literacy

Daniel T. Lerner explains that upon reaching adolescence, children should have already formed healthy relationships with money. But the work isn’t over; teenagers require specific guidance to enter early adulthood with a sensible head on their shoulders.

Teaching Contentment

Teenagers often spend a lot of time on social media, triggering the comparison trap. From total strangers to friends to family members, they’re constantly seeing things they may not have — and they’re the perfect age to try and convince their parents that they too, need these things.

Teaching contentment goes a long way to preventing such needless items.

Simplifying Budgets

Finally, Daniel T. Lerner suggests that utilizing simple budget apps can build financial routines and healthy money habits in teenagers that are likely to continue into adulthood. Most are free to download and help teens plan their income (regardless of how small it is) while they’re still under a paid-for roof.

Final Thoughts

Teaching children about finances is a crucial step in preparing them for a successful and secure future. By instilling good financial habits and values from a young age, children can learn how to budget, save, invest, and make informed financial decisions.

These skills not only benefit them as individuals but also have a positive impact on society as a whole. As parents, teachers, and mentors, it is our responsibility to provide children with the tools and knowledge they need to become financially literate adults. By doing so, we can empower the next generation to make smart financial choices and build a more prosperous future for themselves and the world around them.