Basic Intergenerational Financial Literacy

Making good choices about how we spend money is every one's responsibility. When parents understand basic financial principles and give their children opportunities to be involved in financial discussions and activities, children are more likely to become fiscally responsible adults. One way parents can give children these opportunities is by including them in discussions about finances. Family discussions are one way of ensuring that everyone's needs and wants are made clear. Then prioritizing those needs and saving for them a little at a time can help avoid going into debt. Involving children in these discussions gives them a sense of their importance as a family member and lets them see that planning and budgeting are essential parts of family finances. Even very young children can understand what making choices means.

The four resources listed below provide financial activities for adults and older children. They are designed for exploration, discovery and development around the topic of financial literacy.

The resources will:

• introduce basic financial ideas and vocabulary
• provide budget decision practices that are FUN
• explore ideas for including children in conversations about money

Two of the resources are presented as interactive games that can be played online. All four resources are provided in PDF format for downloading and printing for future use.

Resource One: Values Ranking

The goal of this activity is to raise your awareness of what you value and how these values affect your financial decisions. Take time to read each choice carefully and reflect on why you have chosen it.

Now, let's get started. Click here to begin the ranking activity online. Using your mouse, click on an item and drag it onto the ranking sheet. You can change your mind and move items around as many times as you like. There are no right or wrong answers so be as honest as possible.

This activity would be great to share with older children or adult family members. As you choose each item, discuss the reason(s) for your choices. This discussion will help everyone know about what each of you values and can help make financial decisions. You can print the activity sheet to use as a resource when an Internet connection is not available.

Click here to download a printable copy of the Values Ranking activity.

Resource Two: Spend-a-Penny: Budget Basics

The goal of this activity is to provide a hands—on budgeting experience. It's fun and easy to play! The categories included are the basic items you need to consider when developing a budget. The great thing about this activity is that you are in control of how much you spend and can decide on what you want to spend your pennies. Take time to read each category and notice how much each of these items will cost. Remember, don't spend too much!

OK, let's begin. Click here to begin the Spend-a-Penny activity online. Use your mouse to click on the number of pennies you want to spend. As you review your expenses think about your short and long term financial goals. You may be thinking that instead of pennies the game should involve dollars but remember that "every penny counts."

This is a fun and easy to understand game you can try with children to make learning about budgeting fun. You can even "make it real" by printing the activity and using real pennies to play the game. As you and your child make choices , discuss your reasons and encourage your child to share his or her ideas.

Click here to download a printable copy of the Spend-a-Penny activity.

Resource Three: Benefit-Cost Analysis

The Benefit-Cost Analysis chart provides one technique that can be used to help you make any kind of financial decision. As you list all of the benefits and costs of a particular choice or decision you can begin to see if the benefits outweigh the costs in a clear manner. Writing out each side of your decision also gives you the opportunity to reflect on whether this decision is based on your "needs" or your "wants" and will allow you to proceed accordingly. After listing all the benefits and costs of your decision you can then think about whether or not you have made a good choice.

So let's begin, click here to print the Benefit-Cost Analysis worksheet. Write your decision in the space provided. Now, begin to list the benefits and the costs of your decision. Remember, a cost is something you give up, and a benefit is something you get. If benefits outweigh the costs, then the decision may be a good one for you to make.

This is a strategy you can share with your children. By sitting down and going through this process together, you can model a great decision making (problem solving) strategy for your children.

Resource Four: Spending Leaks

The first important step in setting a budget is to review how you are spending your money now. Many people find themselves asking "Where did all my money go?" each month. You can use the Spending Leaks table to help identify gaps in your budget. This easy to use table will allow you to see very quickly where your money is going and how much you are spending. It even provides a column where you can begin to make decisions on how to stop that leak.

Click here to download and print the Spending Leaks worksheet. Begin by placing a check mark next to statements that describe things you do. In the next column, estimate how much this leak costs you each month.

For example: a cup of coffee from the store costs $1

$1 X 5 times per week=$5 or $20 per month

$20 per month X 12 months in a year=$240

Once you have studied the list of items, placed your check marks and estimated the costs, add up all the items (costs) and multiply this total by 12. This is how much your spending leaks cost you in an entire year. Just think what you could have done with that money! Now, go back and write down how you plan to plug each leak. Be creative, and remember, practice makes perfect, so try this each month to chart your progress.

This activity is fun and can be shared with family, friends and neighbors. You can encourage each other to stop those spending leaks. Enjoy!

Financial Literacy in Action

Now that you have a basic plan for spending, what are some ways adults and children understand the difference between needs and wants and making choices? Read on for some examples of basic intergenerational financial literacy in action. The purpose of the activity below was to allow children to make choices and begin to understand that things cost money.

At the Cane Run Family Education program in Louisville, Kentucky, teachers in the classroom (for 2-4-year olds) set up a grocery store check out counter (complete with a cash register) in the "House/Dramatic Play" center. Children could select plastic food items from the shelves of the center and check them out at the register. Each child was given a bag of money (that the parents made) to spend and gave it to the cashier when he or she checked out. Some of the children used "debit" cards the way they saw their parents do at the store. The parents worked with the children helping them choose the items they wanted to buy. When the child ran out of money he or she left the "store."

To build on the school experience, teachers helped parents design an activity parents could do with their children while shopping for food at the grocery store. Below you will find their ideas:

First - Bring home the weekly sale circular from your favorite food store (newspapers often have a whole section on Sunday, or you can get it for free at the store).

• Look for the pictures of the items that you need first and cut them out (examples – milk, eggs, cereal, bread, peanut butter, meat, beans etc.).
• Let your child glue each one to a 3x5 card or piece of paper.
• Cut out the pictures of the items you want and glue them to a piece of paper (donuts, brownie mix, candy, soda pop, chips, etc.).

Second - Before you go to the store:

• Decide how much money you can spend on food today.
• Add up the items you need first (items on sale will say the price, others you can estimate).
• Subtract the total cost from the total amount you have to spend on food.
• The remaining amount is what you can use for the things you want.

Third - When you arrive at the store:

• Give your child the cards with the pictures of the items you need.
• Let him or her match the picture to items on the shelf.
• Repeat the process using the pictures of the items you want.
• Make a choice between items if there is not enough money to get all of the items on the list.
• Let the child choose between two that you want.

After – On the way home:

• Talk with your child about shopping—thank him or her for helping you.
• When you get home make a list of some of the things you might need and want to remember for the next shopping trip.

These activities are designed to serve as practical resource materials for parents to use with children in a classroom and at home. Including children in these activities helps them to make decisions about spending, preparing them to become smart money managers.

About these Resources

The National Center for Family Literacy (NCFL) was the recipient of a grant from Louisville Metro in 2005 allowing for the development of a workshop for adult and family education teachers titled Family Money Matters. The grant provided the Louisville, Kentucky, community with an opportunity to explore financial literacy through a collaborative approach. The partners were: Women 4 Women, Center for Women & Families, Jefferson County Public Schools, and the Kentucky Council on Economic Education.

The resulting workshop focused on strategies for teachers to use with adult learners to increase their economic skills, and emphasized and provided activities for the adults to do with their children, both in school and at home. The resources included here were used in the Family Money Matters workshop. They have been provided for national use on Verizon Literacy Campus for all to share.

This information was produced by the National Center for Family Literacy for use on www.thinkfinity.org, a powerful educational platform supported by the Verizon Foundation. This information is in the public domain and may be reproduced for noncommercial purposes without permission.

Copyright © 2005 by the National Center for Family Literacy. Produced by the National Center for Family Literacy (NCFL) (325 W. Main Street, Suite 300, Louisville, Kentucky 40202-4237).