Raising Finance Savvy Kids

Financial education is a lifelong undertaking – and, unfortunately, it’s one subject that isn’t taught in schools. If you want to help your kids grow up to be financially responsible adults, it’s really up to you to help them understand money, budgeting, and finances. Ideally slowly with the basics, and work your way up to more complex concepts. Need some suggestions? Read on to get some ideas for age-appropriate financial lessons, whether you’ve got kids in preschool or college prep courses.

Preschool/Kindergarten

Kids in this age group aren’t ready for high-concept discussions about debt and budgeting, of course. But that doesn’t mean they should be completely overlooked, either. This is a perfect age to start getting your kids comfortable with money.  Here are a few things you can do:

• Start building their money vocabulary. Kids this age love learning new words, so this is a great opportunity to teach them words like “dollar,” “penny,” “dime,” and so on. You could even teach them other finance-related words, like “bank” or “check.”
• Play “grocery store.” Little kids like pretending to do grown-up things like cooking or shopping. So, take the opportunity to demonstrate concepts like exchanging money for goods, comparing prices, and budgeting. You can use or make your own play money, or add a touch of realism by using cash and coins from your wallet.
• Take them to the bank. This is another great way to get your kids comfortable with money. The goal here is to reinforce the idea that money and activities like banking and paying bills are just a part of everyday life.

Elementary School Kids

By elementary school, most kids are ready to understand basic budgeting – and they’re ready for activities that encourage them to handle or count money.

• Play board games. Monopoly can help teach kids to count money, and it also introduces ideas like paying rent, investing, and making purchasing decisions. The Game of Life combines money with decisions about education, careers, and living expenses. Another oft-overlooked classic? Payday, which can teach some valuable lessons about how to spend (and save) your paycheck.
• Discuss “needs vs. wants.” By elementary school, most kids should be able to understand the difference between a “need” and a “want.” Now is a good time to start introducing that concept. Start by explaining the difference between a need and a want (food is a need, for example – but French fries and pizza are wants).
• Introduce the idea of saving up to buy something. This is a good age to teach kids that sometimes, you have to wait to buy something you want. Help them put aside allowance money (or funds from birthdays, holidays, or other sources) and save up to buy a toy, game, or book that they really want.
• Discuss money in front of them. Teach your kids that money isn’t a taboo or scary subject by discussing money openly. Other ways to make money seem less intimidating: Let them see you paying bills (don’t retreat to an office or den) or discussing the household budget. The goal here is to make money management seem like a normal part of every day life, like cooking or cleaning.

Junior High

At this age, you should build on and reinforce your kids’ existing skills. Make sure they keep up with math and encourage them to think critically.

• Don’t let math skills slip. A recent study by a researcher at Harvard Business School found that students with stronger math skills tend to do better with money later on. Keep an eye on your kids’ math grades and sure that they don’t fall behind in this critical area.
• Teach them to be ad-savvy. The next time you see a TV commercial or an ad – especially one aimed at young people – turn it into a teachable moment. Have a discussion about the different gimmicks and techniques that advertisers use to make “wants” seem like “needs”. The more aware your child is, the less likely he or she is to be swayed by flashy advertising.
• Encourage them to participate in school or club fundraisers. Selling cookies or chocolate bars door-to-door can help raise funds for your kid’s band, drama club, or scouting troop – but participating in fundraisers can also give kids experience counting and handling money and doing things like making change.

High School

High school students are edging close to adulthood – and adult responsibilities. This is a good time to introduce them to more “real world” money issues and give them more freedom to make decisions (and mistakes).

• Let them get a summer job. There’s really no substitute for earning an actual paycheck from a “real” job (i.e., not babysitting or mowing lawns). Help them open a checking and account if they don’t have them already, and work with them on developing a budget.
• Include them in family budget discussions. Older teens will benefit from sitting in on these discussions. It’s important for them to see you making decisions, separating family needs (think, housing, electricity, and food) from wants (like vacations and entertainment). Encourage them to ask questions and ask for their input.
• Give them some financial responsibilities. Ask your teen to kick a little cash. If they use the family car, consider making them pay for gas or for a portion of their car insurance. Consider asking them to pay for some (or all) of their phone bill. Set a limit on the amount you’re willing to pay for things like clothing or entertainment – and make it clear that they need to pay for any extras.
• Loan them money (responsibly!). One way to help your teen avoid debt problems in adulthood is to teach them about responsible borrowing. Consider giving them a “practice run” for a larger purchase. Have your teen cover part of the cost (think of it as a “down payment”), and then you cover the rest. Then, work with your teen to come up with a repayment structure – and don’t forget to include interest! Make sure to agree ahead of time what happens in the event of a missed payment.

One tip that’s good for every age? Keep at it. Teaching your kids to be financially savvy is something that will take years. Keep lessons age-appropriate and be patient – and look for everyday teachable moments in everyday life. The more you can share as your kids grow up, the more likely it is that they’ll grow up to have a healthy relationship with money.

And remember, you’re never too old to learn a few new things about managing money and paying down debt. if you need debt advice or have questions about debt, credit, or credit cards, you can always reach out to Debt Guru.  Contact the Debt Guru team today for a free credit and debt counseling session