My third-grader took a quick look at the financial bailout headline in the newspaper this morning and quickly gave up trying to understand it.
I don’t blame her. I feel the same way.
It's hard to fathom what is going on and what to think or do about it. But there is something useful we can do in the here and now: Teach our third-graders and the rest of our kids about money and finances so they can make good decisions later.
Here are three ideas, suitable for a range of ages:
1. For young kids, introduce the idea of a budget. There are lots of things we want to buy, but we only have a certain amount of money. How do we decide what is most important to buy? How much should we save and for what? How much should we give away and to whom?
2. Talk to late elementary and middle school children about borrowing. Explain that people sometimes borrow money to be able to buy things that they would otherwise not be able to afford. Introduce the ideas of interest and risk. How much should people borrow? What happens if you can't repay the loan? Kids are fascinated by all this.
3. Ask your child's school what they're doing to develop students' financial literacy. Many states are now including financial literacy in state standards. A suggestion you could bring to your child's elementary or middle school: Bizworld is a terrific program for teaching entrepreneurship and finance. I've seen the kids who've been in the program present their ideas for businesses to successful entrepreneurs in their community and it gets everyone excited!
One more idea: Perhaps you can help your child (and yourself) better understand what $700 billion is by asking them to figure out how many weeks/years/centuries of their earnings/allowance it would take to save $700 billion. (Have your child leave a comment on my blog with the answer!)
Finally, for more tips on talking to your child about financial literacy, check these GreatSchools articles: