Despite economic racism in the United States, black Americans are making tremendous progress. Between 1971 and 2021, black adults made the most progression of income gains of any racial group, with net increases in income ranging from 12 to 14 percentage points. One reason may be due to the financial lessons that black parents pass on to their children.
According to a 2020 survey by T price. Rowe, more black children than white children say their parents talk about the importance of saving (42% vs. 32%), maintaining a budget (35% vs. 19%), and setting financial goals ( 29% versus 18%) . As black children grow, they incorporate these lessons into their financial lives and build on the foundations their parents laid out for them.
Financial literacy advocates recommend teaching your children about money as early as possible. Here are simple, age-appropriate ways to do it – for benefits that will help the next generation and beyond.
Start with games
The very early years are the time to teach your child the difference between a dime, a nickel, and a quarter. Tiffany”The BudgetistAliche, former preschool teacher and New York Times bestselling author Get good with money, recommended keep money lessons simple and fun for little kids. One of the best ways for kids – and adults, for that matter – to learn a new skill is through play. Monopoly is a family game that can be used as a financial literacy teaching tool and can also introduce the concept of real estate investing.
For young children, another fun task could be to involve them in your runs. Ask them to help you calculate the total cost. If you pay cash, ask them to help you count the money needed to buy your items. Even if they can’t help you at first, they are attentive.
Open a deposit account
As soon as possible, open an investment account in your child’s name. Investing early is a clear path to building wealth; for many people transferring assets to the next generation, investing in the stock market was key to their long-term wealth building. You can also ask other family members to contribute to the custodial account on the child’s birthday instead of physical gifts.
A maximum of one securities account is available financial institutions, such as Ally and Fidelity.
Use this piggy bank
In addition to a deposit account, open a savings account for your child and take the opportunity to teach them how to save money and take advantage of compound interest. Although interest rates are low on many savings accounts, you can still show them how the money grows over time. We recommend that parents open a high yield bank account for their children, as it offers higher interest rates than standard accounts. Give them the responsibility of tracking deposits and withdrawals.
make it real
Money is an abstract subject – until it becomes real with bills and budgets. That’s why it’s a good idea to involve kids in real money tasks and give them visual aids. Showing them an electricity bill and then asking them for help reducing the next bill by turning off lights and appliances that aren’t being used is a great start to slowly introducing the importance of mindfulness. money.
You can also compare the invoice amount to the cost of a device or other item they want you to buy for them. This will help make the concept of money more real and make it clear that it takes effort to create the lifestyle you want.
Talk about entrepreneurship
Developing entrepreneurial skills is an important part of learning about money. You could help your child start a lemonade stand or other small business during the school holidays.
Be sure to tell them about entrepreneurs in the news or people you know personally, whether someone has opened their own flower shop, a beauty salon, or a tech startup. Help your children understand that entrepreneurs are those who have an idea and decide to start their own business.
When they get to high school…
Now is the age where you can involve them in the custodial account that was opened to them when they were young. Show them monthly statements and involve them in selecting investments. Depending on the child’s maturity, you may want to consider giving them “play” money to practice investing on their own. Thanks to new fintech tools, novice investors can buy fractional stock shares. Have fun encouraging them to share a monthly or quarterly update on their progress.
Help them launch into financial adulthood
Introduce them to the pros and cons of credit cards. If they plan to go to college, talk to them about student loans. And, whenever it seems appropriate, consider encouraging them to get a part-time job. Responsible management of these areas – credit, debt and employment – will become mainstays of their adult financial lives. Starting them early and with positive guidance will have lifelong benefits.
Stay Focused on Abundance
The high school years are a great time to demonstrate the importance of a positive mindset. When it comes to money, a positive mindset is called a abundance of money. The opposite is a scarcity mentality.
You can foster the right mindset by modeling healthy conversations about money. For example, instead of saying, “We can’t afford it,” consider saying, “This purchase is not a priority for us right now.” It teaches your children that anything they want is possible to achieve, even if it is not within their reach at the moment.
An abundance mindset will prove to be an incredibly powerful tool for black children, as they will unfortunately experience racism that could impact their income and wealth building options. Finally, consider encouraging your child to read books on personal finance. by black authors such as choose to prosper by Bola Sokunbi or Our money stories by Eugenie Georges. Even if your child isn’t ready to pick up a financial book just yet — as some teenagers won’t be — you can read it yourself and share what you find inspiring. Your child will likely remember these statements from mom or dad, even if they don’t recognize their meaning at the time.