When and how we learn life skills depends on several factors. We have many chances to practice social graces, such as ‘thank you’ and ‘excuse me’. Children learn to manage their time and prioritize through school or deciding what sports they want to play.
However, gaining practical finance skills is more difficult. An allowance or odd jobs teach us how to earn money; but little in the way of budgeting and planning.
Many kids simply spend pocket money for quick fun or buying gadgets. Credit cards are the first money temptation many college students will face. A young adult may feel money is earned to be spent based on their brief work history. Overspending without concept of the consequences is a common result. This poses challenges later in life, where a lack of money experience has long term effects.
So, how can we teach kids about money in a practical and effective way?
Here are some strategies to consider:
Learn Money Skills Early and Often:
Parents can teach their children about making a budget and setting aside cash from an early age. You could set small financial goals for buying toys or tech widgets based on the child’s age. Children should then have chances to earn money in stages to buy the product.
Tips for success:
● Set specific targets. Your child should know what the product costs and how much they must save each week/month to get it.
● Let your child make their own decisions. They will be tempted to spend money along the way while saving for a new bike or skateboard. If they don’t reach their goal, be supportive but don’t cave in. You may offer more chores or work so they can continue to save.
Attend Money Workshops and Camps for Kids:
Consider workshops and summer camps geared to kids. Community centers and financial institutions often hold ‘Kid’s Nights’, where money subjects are taught in fun ways. Your local library, community college or bank may hold these events.
In July of 2013, USC Alumnus Elliott Broidy provided scholarships for children to attend summer camps at his alma mater. Careers, money and college life were among the topics.
You may also look to personal finance books with content for the whole family to share.
Our digital world makes it easier to learn real life money skills. There are online tools and apps for kids of all ages.
Young Children: Free apps such as Allowance or Virtual Piggy help children set and achieve money goals. With Allowance, parents can assign chores with dollar values and time deadlines. Kids then prioritize to earn money in the most efficient way. Parents and kids can track % to goal with real time updates. The app even divides earnings into savings, spending and investing buckets.
Pre and Early Teens: Beyond saving, children can learn to grow their money with apps such as Bee Farming ($2.99) and The Game of Life ($0.99).
At Bee Farming, kids runs a virtual bee farm with set time periods to grow the business. The app teaches entrepreneurial skills such as reinvesting, spotting opportunity and managing scarce resources.
Using The Game of Life, kids learn about college debt and buying a house or car. Your child will see how loan rates affect debt and interest payments. This shows kids the true cost of making major purchases.
Teenage Years:College planning becomes a reality in teenage years. Online calculators and social media help teenagers research the best college choices.
Facebook, Google+ and YouTube are more than social sites. Your child can quickly connect with admissions offices and college students for a better sense of each school.
Sit with your teenager and calculate the debt service for each college they’re interested in. Rank your schools in order of preference and decide what college offers the best value, all things considered. A school’s atmosphere, aid, grants and degree programs should all be considered. Effective college planning goes past the hype to understand total costs and benefits.
Money is a vital subject that can be learned outside the classroom. Planning, persistence and technology make this easier.
~*~*~*~*~*~ Sustainable Family Finances Growing abundance while living down-to-Earth.