Take advantage of summer vacation to instill some important financial literacy skills in your children. Teaching kids about money from the earliest age possible will help them build a bright financial future for themselves and their children.
Get Comfortable with Talking About Money
Talking about money can be difficult for many people. You might rather skip the topic. Therefore, the first thing you need to do before you start is to examine your own relationship with money. What is in there that you don’t want to pass on to your kids?
Teach By Example
One of the most powerful ways of teaching kids is through example. Your kids internalize what they see you do, more than what they hear you say. Set an example of being a money-smart consumer. Be careful about how often you use your credit card to pay for stuff. Let your kids see you budgeting, paying bills (if they are not automated), comparing prices, looking for bargains and so forth.
Of course, as with everything, teaching kids about money needs to be age appropriate. But you can start the process of building financial literacy skills in your kids as soon as they are old enough to understand what you tell them.
Here are just a few ideas to help you get started.
Earning and Managing Money
Give your children the experience of earning money. If you prefer to pay an allowance, call it a salary. Assign them jobs around the house, inside or out. Or they can help you at the office. Establish in advance what will be the salary for each of the jobs. Their “salary” can be spent however they wish, but they should know that when it’s gone, they will have to wait until the next “payroll.”
Resist the urge to jump in and save them if they have spent all their money and really want to buy something. In this way, they will learn the concept of budgeting, saving and waiting.
Teaching the Importance of Saving Money
If you haven’t done so already, go with your child to the bank and open a savings account. Encourage them to put a percentage of their “salary” or any other money they receive into the savings account. Take advantage of your bank’s digital banking platform so they can see the status of their savings account online.
Teach About Philanthropy
The concept of giving to others can be started as soon as they begin to earn a little money, whether from you or an outside job. Giving to others is a powerful concept that they will carry with them into adulthood. You can let them pick the cause or charity to which they would like to contribute.
Teaching kids about money when they are teenagers is going to look a bit different. Most likely they are already earning a little money from part-time or summer jobs. Now is the time to talk to them about saving for college. It is also an excellent time to begin the discussion about the dangers of credit card use. Impress upon them the importance of only charging what they can pay off each month. Download budgeting apps so they develop a healthy habit of budgeting their income.
Make Teaching Kids About Money Fun: Use Apps
We live in a digital world. Everyone is using at least one app on their smartphone. Your kids are digital too. A cool way to get them thinking and learning about money is to use kid-appropriate money apps.
Here are some examples:
Chore Bank is a virtual bank. Rather than putting their salary or allowance in their hands, you transfer the money to their virtual account. Your kids can see how much has entered and how much they have spent. This is a great, visual way for your kids to learn about saving and tracking their spending.
Since Chore Bank is a virtual bank, there is no actual money involved. When they decide they want to spend some portion of their allowance on an item, you pay for it and then deduct it from their virtual bank balance. To encourage them to save more, you can add interest every month. Your child can watch his or her balance grow.
If they want a big-ticket item, they will need to wait until there is enough digital money in their account. No advances! This way, they can avoid the habit of immediate gratification which can be a significant money issue later in life.
For your older kids, Renegade Buggies might be a good money app. The app has received a good rating from the Dollar General Literacy Foundation. Kids receive a shopping list and they have to race down virtual store aisles, collecting as many coupons, coins, and dollars as possible along the way. The objective is to save as much money as possible and to learn how to evaluate the best value for the price. They can take advantage of coupons and product promos.