Teaching children life skills is an essential part of preparing them for their bright future. Managing money is one of the most critical life skills someone can have and, luckily, there everyday life offers many opportunities to model good money management habits. Activities like buying groceries or stopping by the bank, are chances to teach real-life lessons. Remember to share with your kids when you are paying bills on your smartphone, tablet, or computer. For most of us, we knew when our parents paid bills because they sat at the kitchen table with the checkbook! Now, most of us pay bills via apps on our phones, which is far more invisible.
Preschoolers & Kindergartners
- Coin Identification Game: When presented with a penny, a nickel, and a dime little kids will almost always believe the nickel is worth the most. After all, it’s the biggest! Let your young child trace each coin and then color them in. Now let them match the real coin to what they drew, talking about the name of the coin as they do it. Next, have them stack the number of pennies each coin represents
- Play Store: Print off some play money, gather some toys and household goods and set up a store in your living room. Kids love playing store, but they will also learn about how money works while playing.
- Play Restaurant: Kids love playing restaurant as much as they love playing store. Use the same play money, and at the dinner, give your child the check! Let them pay with the play money, and don’t forget to talk about tipping.
- Clip Coupons: Let your child watch you cut coupons from the paper. While at the store, let them hold the coupons and look for the products. Show your child on the receipt how much money was saved using coupons. Now put that money in a jar earmarked for a family treat. This is a great way to show kids, in a very concrete way, how saving money in one area helps them reach a financial goal in another area of their lives.
Elementary & Middle Schoolers
- Allowances: Allowances can be a controversial topic. Should they be tied to chores? Are they strictly to cover fun money? How much should your child get?
Money writes that children who receive allowances learn valuable skills that they carry into adulthood. So decide how much to give, and then talk with your child about what expenses they are supposed to cover from the money. As they get older, the allowance should increase but so should the things the child is responsible for paying for out of the money.
- Bank Account: Kids should be required to save a portion of their allowances and any cash gifts they receive. Many banks offer savings accounts just for kids. Help them record their deposits, look at their statements, and even introduce them to online banking.
- Comparison Shopping: Teaching your kids to be good shoppers is an essential part of teaching them to be good with money. So at the grocery store, figure out if buying onions in the bulk bag or individually saves the most money. Buy name brand tissue one week and a generic brand the next week, and then discuss with your child if the quality difference is worth the additional cost.
- Work through Money Lessons, Together: The U.S. Treasury Department distributes this curriculum aimed at Middle Schoolers. It teaches them about saving, project planning, taxes, and budgeting in four lessons.
- Play the Stock Market: Kids particularly like this game when you include stocks from their favorite companies, like Disney or Nike. Have each member of your family pick a stock. Spend a predetermined amount of time tracking the shares and monitoring their progress. Declare a winner (whose stock gained the most value!) Each time you play the game, add a new level of analysis. Soon your kids should be picking stocks based on the stock’s performance instead of based their love of the product. Your kids will carry their knowledge of the stock market into their adult lives.
- First Debit Card: There are multiple debit cards aimed at teens. Working with your teen, chose one that offers low fees, the ability for parents to move money into the account easily, and has an app so teens can get used to checking in on their balance frequently. These debit cards allow teens to learn how to responsibly use debit cards and the importance of keeping up with the balance and checking the account often. It also gives parents the ability to monitor the account and put in safeguards, if necessary.
- All About Credit: Throughout their lifetimes, people use different types of credit. Credit cards, car loans, student loans, title loans, and mortgages are the most common. You want to teach your children about credit now, so they use it responsibly later. The most important thing you can do is to talk openly and honestly about credit. As they get older, help them pick a student credit card and offer to help them monitor the card for a few payment cycles. Talk to them about credit scores and show them different ways to monitor their score.
- Budgets: High schoolers should be budgeting their money. Help them figure out what their savings goals are, what their expenses, are, and how to allocate the money they have to pay their expenses and save toward their goals.
- Student Loans: At age 18 many teens will be faced with a financial decision that will impact a significant portion of their adult lives and could result in debt equivalent to some mortgages. Talk about college affordability, what your family can contribute, the importance of seeking out financial aid, and how student loans will impact the choices they get to make in their 20s and 30s so they are prepared to choose a college that will result in little to no debt. There are many resources available to guide the conversation. This article discusses the impact of student loans, while this calculator shows teens what the monthly payback would be on various student loan amounts, and even calculates how much you would need to make after graduation to support the payment.