Money-Smarts 101 for Kids

 There are as many philosophies about kids and money as there are flavors of yogurt...in other words, a lot of them. Some parents share the brutal realities about money, budgets, debt, and more, in ways that scare the hell out of kids. Others create experiences that make goods and services seem to magically appear out of nowhere with no thought of the cost. Generally speaking, both ways are pretty poor ways to teach money smarts to kids.

 Children of all ages benefit from money smarts. Learning key concepts in a developmentally appropriate way better prepares kids for the real-world expectations they will face as adults. Here are some age-appropriate ways to teach money smarts to kids.

 Teach value at any age: teaching your children about quality and value are important concepts. At the grocery store, teach your kids about brand name and generic items. Understanding what products taste best and are worth spending more money on is helpful. Learning what products can be purchased for less but hold value is equally important. You may be willing to buy generic corn flakes but have to buy brand name mayonnaise. Knowing how to discern which products are worth spending more on is a helpful tool to have.

 Teach taxes to middle school kids: Taxes are an important and inevitable aspect of adulthood. Teaching your kids how taxes work at an early age prepares them in more ways than forking over a part of their earnings. Help kids by taking a portion of their allowance or incidental money and put into a family fund as a “tax.” Learning how the government plays a role in their adult life can help kids make informed choices about their employment and might help them choose a career that helps them keep as much of their money as possible.

 Give your high-school kids a checkbook register: Whether check writing is obsolete or not, keeping records is vital. Helping your high-schooler track and budget their earnings or their allowance will help them see where their money goes and make better spending decisions. Have them keep track of all their income and spending and meet with you once per week or per month to go over their notes. Help them modify their choices if they are getting off track or overdrawn. Some high school students even have jobs and credit cards, and many are responsible for their own cars, insurance, and gas.

 Good parenting includes keeping kids safe, giving them choices, and helping them understand the real-world situations that they will manage in life. Helping kids with their money smarts now will make their transition into adulthood smoother and less shocking. Your attention to their money smarts will go a long way for their future success.

So, teach them a few key concepts:

• the value of a dollar, product quality, and the difference between wants vs needs
• set up a savings account
• require kids to "pay themselves first" with all money they earn or receive...10% to savings
• explain interest...both interest they can earn and interest on credit cards and loans
• teach them to budget, save for a rainy day, and save for purchases

A few key concepts can make a world of difference to your children's financial literacy. 

Remember, it's never too late to learn, appreciate, and be grateful.

Until next time,

Cheers!

Lisa