Children and Money!
Children are expensive, but that’s not what this blog is about. In honor of National Financial Literacy month, I have chosen the importance of teaching your children about fiscal responsibility as April’s topic. Sounds like fun dinner table conversation, right? Not really, but most high schools, private and public alike, are not focused on sending financially literate grads to college. This means that if you don’t teach them the basics at home, your child could wind up a financially illiterate adult.
There are some simple ways to sneak money management lessons into your kids’ daily lives. Obviously, the way that you introduce the concepts listed below may vary based on the age of your children.
1. Price consciousness – I probably tell my kids how much things cost too often and usually in the context of a guilt trip. That said, helping kids understand how much a week of soccer camp costs or what one night in your hotel room on Spring break would run them is not a bad thing. If dollars are too abstract, you could tell them what percentage of your monthly or annual income these expenses represent. Another approach might be to demonstrate and encourage comparison shopping online for a needed item (for teens) or in a grocery store (for little kids).
2. Trees don’t grow money, but time can – Opening a savings account for your kids is a great way to teach them that they can earn more money just by investing the money they have and being patient. There are some kid-oriented savings account options out there (e.g., Capital One 360 Kids Savings and Bank of America Minor Savings accounts), or you can open additional accounts at your current bank. We opened two new accounts through Marcus by Goldman Sachs, and now Grandma’s birthday checks are earning 2.25%.
3. Spending self-control – I am guilty of buying my children over-priced airport neck pillows and other spur of the moment non-essentials. However, I do say “no” to certain requests and try to explain why in the context of a want-to-have versus need-to-have analysis. Some of my favorite things to say “no” to include ice cream from the ice cream truck that always shows up at the end of soccer practice and Fortnite video game extras. Of course, it helps if you can demonstrate self-control in your own spending behavior and tell them your thought process in saying no to an unnecessary purchase.
4. Charitable giving – Introduce the concept of philanthropy and donating money (in addition to time) to others who need our help. You can use a database like https://www.guidestar.org/ to find non-profit organizations that support a cause that they feel passionate about. It doesn’t have to be much money for it to be a valuable undertaking for your child and for the charity.
It’s already clear in my house which child is eager to squander and which to save. There’s still time for my 8-year old spendthrift, though…