Teaching children fiscal responsibility doesn’t have to be scary or confusing. It’s easy with these 5 tips regarding Money Mastery for Kids: Five Ways to Make Financial Literacy FUN!
How Do I Teach Little Kids About Money Mastery?
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As parents, we work hard to raise well-adjusted, kind, intelligent humans who will go forth and become productive and responsible members of society. At home, we do our best to teach them manners, proper hygiene (which for some reason they seem to temporarily forget around age 12), good nutrition and sleep habits, and so much more. At school, they learn history, math, English, and other fundamental skills.
However, there is one critical component where many schools (and parents) are still falling short – financial literacy. In the first quarter of 2019, US student loan debt rose to $1.49 trillion with the average borrower carrying a balance of $31,7121. Meanwhile, nearly 30% of US households have no savings set aside for emergencies and couldn’t handle a sudden immediate need, such as a major car repair2.
While some schools offer personal finance or consumer math as a class option, these are typically electives, or only offered for one semester. Hardly long enough to make a lasting impact.
Teaching Kids About Money Management
I don’t know about you, but I didn’t receive much of a financial education from my parents–maybe because we never had a lot of extra money. Both of my parents worked very hard just to get by. There was no talk of investing or compound interest, and those subjects weren’t taught in my school.
In fact, I learned about compound interest the hard way, as I’m sure many others did- in college when I applied for a credit card at a table on the quad just so I could get the free hat! I quickly maxed out that card and suffered quite a shock when the bill arrived a few weeks later.
Messaged received. Painful (and expensive) lesson learned.
Money Mastery For Kids: Five Ways To Make Financial Literacy FUN
Here are five ways to start teaching kids about money, how it works, and how to make it FUN. These simple concepts are easily understood even by very young children ( I started my daughter when she was four) and only take a few hours per month to implement. Spending just a little time at home developing positive money habits will pay dividends for years to come (see what I just did there?)
Money Mastery for Kids: Fun Tips and Tricks
1.) Counting change and handling “real” money:
Great for ages 4 and up
Personally, I don’t carry a lot of change or bills around anymore. In the age of plastic and application-based spending, money can quickly become an abstract concept and lose its “real-ness.” The simple act of counting change (and saving in a good old fashioned piggy bank versus a brick and mortar bank) can help to make money and its value REAL. Additionally, having children make purchases with cash can help bring the true value of their savings into focus quickly and potentially cause them to reconsider some of those purchases.
2.) Helping to plan a family vacation or major purchase:
Great for ages 8 and up
Helping to budget and plan for an upcoming vacation, activity, or major family purchase is a great way to teach slightly older children about smart ways to save (and spend money), and in what situations to do so. Thanks to the invention of the internet, children can research drive time and the cost of gas, driving sto a destination versus flying, how much to budget for food, excursions, etc. Then, if the kids want to “upgrade” an experience, they may have the opportunity to invest some of their own funds to do so or look for ways to save in other areas to make those extra fun things happen.
3.) Start a kid-friendly business:
Great for ages 6 and up
Once again, because of this amazing invention called the internet we have the opportunity to teach kids about how money works, and we can go way beyond the lemonade stand. There are hundreds of opportunities to start kid-friendly online businesses (with a little help from parents.) Everything from selling toys they no longer use on eBay and Amazon, to starting a t-shirt or physical products store online, or identifying a problem among their classmates and working to solve it ( the definition of entrepreneurship), to performing simple household tasks for family and neighbors.
The opportunities are endless to help teach kid how providing value and service to others dictates the exchange of wealth. Also, it teaches them about startup costs, the cost of supplies, shipping fees, and (ugh) taxes.
4.) Offer incentives:
Great for ages 4 and up
A few years ago I accidentally discovered a“trick” for teaching my kids about money. I decided to start incentivizing them by offering to pay them interest for what they saved each month. I created a system of fun worksheets, spreadsheets, and coloring sheets to help them (and me) learn about the future impact of their choice to continue saving or go ahead and make a purchase.
The results have been pretty phenomenal. My daughter absolutely CRUSHED me last year and is a savings machine, while my son chose to take his savings and purchase an Xbox.The bottom line is that it was their choice and they fully understood the consequences of their actions.
If you’d like to use the system with your family, you can learn more about it here.
5.) Develop the habit of giving:
Great for ages 6 and up
While teaching our children that money is a tool that is used in exchange for value given and received, we can also show them that is an instrument to do tremendous good around the world, or even just down the street in your local community.
As a family, consider choosing a charity to donate to once per year, or once per quarter, whatever works for you. If you’re looking for local impact, consider volunteering a few hours per month. This will help to teach kids about the currency we possess that is even more valuable than money: our time.
Ultimately, children will always learn the most by watching us- their parents! Our attitudes, habits and mindset about money will shape them for the rest of their lives (whether we like it or not.) We have the power to shape the next generation of consumers (and givers). Together, we can break the debt cycle and position our children to experience what it truly means to be financially free.
Dan McCabe is a best-selling author, real estate investor, and the founder of Wealth Smart Families. He lives in Minnesota with his wife and three kids ages, 10,8, and 3.
1 Source: credit.com
2 Source: bankrate.com
Money and Budgeting Tips for Families
What is your family’s best money-saving tip? Comment below!
Source: https://kidsactivitiesblog.com/130908/money-mastery-for-kids-five-ways-to-make-financial-literacy-fun/
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