“When am I ever going to use this in my future?”
It’s the mantra heard around the world, and rightfully so. After all, as wonderful as teachers are, every school includes topics that children may never need again unless they grow up to become Physics Professors, Historians, or Surgeons … How we have all suffered through Trigonometry, Civil War battle dates, and dissections of fetal pigs! Ick!
But what about information all kids definitely will need to know, such as how to balance a checkbook, save for the future, or live on a budget? Those items are left up to parents to teach and role model. The rub? Many adults struggle with money questions themselves and may have little idea how to impart age-appropriate financial wisdom.
Not to worry. As always, Squeeze, your financial concierge, has your back.
Consider these age-appropriate pointers …
You need to explain that money buy things, and that paper and coin money have different values. Nickels and pennies look like they are worth more than dimes because they are bigger, but that’s not true, as you well know.
Little children can also understand that a big kid or adults earn money by working. Most importantly, kids can learn as young as age 3 that in life there are things you 'need' and things you 'want'. This differentiation will help them immeasurably down the road.
- Play pretend games that involve an exchange of money, like the grocery store or eating at a restaurant. Make paying part of the routine
- Talk about jobs wherever you see them … the waiter, bank teller, teacher, doctor, police officer, or the babysitter.
- Cut out pictures from magazines with your child and glue them onto a poster marked 'I Need' and 'I Want.' On the former, you’ll have clothes, food, school, and a home ... On the latter, toys, games, trips, special dessert treats, and other items.
- Give children choices: This OR this ... As in, 'We can buy tickets to see a movie or buy a pizza or buy you this stuffed animal.'
For Elementary School Kids
Kids aged 5-11 are ready to learn how to compare prices (online or in person), how to clip coupons and when to use them, how everything gets paid for, how saving their money pays off, and how different jobs pay different salaries. Now is also a good time to donate time and money to charity together.
- If you haven’t, open a Savings Account for and with your child, and contribute to it together after birthdays or with a part of their allowance money. Explain how it grows.
- Give them three or four clear containers, so they can see how much money they have at all times. Containers may be designated, 'Save' or (Bank) ... 'Spend', 'Donate' and after age 10 or 11, 'Invest.'
- Talk about how different kinds of workers earn different amounts of money, a doctor's salary vs. a waiter's, for example, and why.
- Participate in community service efforts together and explain the necessity of giving back; donating time and money will become a habit if it begins early.
- Use cash as often as possible so kids can see the money leaving your hands.
- Start playing bigger-kid money games like Monopoly, Payday, and The Game of Life, and talk about what’s really going on behind the decisions.
- Start paying your kids a weekly allowance, and come through consistently as long as they complete their designated, age-appropriate tasks.
- Consider calling them tasks or goals instead of chores.
For Middle School Kids
Kids aged 12-14, can learn about living within their means. When to do things themselves (tightening a bolt on a bicycle) vs. spending money on repairs; saving money for the future, including emergencies, and why you use different payment methods for different items. All this will help teach them early the price of making money mistakes.
- Instead of giving kids a set weekly allowance, assign different tasks for different payments. For example, taking the dog for a long walk is worth more than quickly taking out the garbage; feeding the fish is worth less than unloading the dishwasher
- Involve kids in cutting coupons and bargain-hunting efforts.
- Give kids small shopping tasks with set amounts of money. If they make mistakes, allow them to learn from them.
- Have something to repair? Research with your child the costs of materials, skills required, and time invested versus hiring a professional.
- Discuss the 'smoke and mirrors' of advertising ... For instance, there may be an alluring commercial for an Art kit that sells itself by showing professionally created products made by adults. Kids are not capable of making such creations, at least not right away. Help your children become media savvy.
- Talk to your children when writing checks versus using credit cards and cash. Why are you using these different methods? Discuss that, even though some money is 'invisible', it’s still real. Talk about credit, interest rates, and how credit card limits shouldn't be abused.
- If you already have established retirement or college savings accounts talk about them, how much you put into them, how often, and what your goals are.
For High School and College-Age Kids
Kids of these ages need to know that managing money is more complicated than it looks on the surface. They more readily learn about taxes, getting and maintaining a job, car upkeep and insurance, rent, opening up a checking account, and using a credit card. They will learn about how much colleges and universities cost, and the real price of student loans.
- Ask your child to make a list of all of the things he thinks adults pay for and go over it together. Most likely, she’ll list things like house, car, phone, clothes, and groceries, but will be missing things like savings plans, loans, utilities, taxes, tips, interest, and insurance. Talk all this through.
- Encourage your child to get a job that works with his schedule. He’ll likely be shocked over how much is taken out of each paycheck for taxes. Make him responsible for paying for something himself like gas, entertainment, car insurance, or gifts. Then help him work out a budget
- Help your child open a credit card and checking account, and discuss spending limits, savings, and responsible debt levels. Keep tabs on all this together.
- Research college and university costs, and apply for loans and grants together.
Within an assigned budget give your child a family task like planning a vacation ... Have her research all costs (travel, food, recreation, taxes, tips, gas, parking, etc.) and come to you with an itinerary and price inventory.
- As with any other subject, money and finance need to be taught piece-meal and regularly to have a lasting impact. Grow a sense of pride in your children as skills like planning, research, organization, and basic accounting develop. From piggy banks to money market funds, become an asset to your children.