It’s clear that financial literacy isn’t a skill our children are taught successfully in school or at home. Just take a look at what we know about the average American consumer: a whopping 80% of Americans have some kind of debt. The average household debt is on the rise, as well. It’s true that some debt (like mortgage debt and car loan debt) is almost unavoidable for many people. However, we should be teaching our children how to manage their money intelligently and make smart financial decisions so that they’re able to get out of debt in the future or avoid it altogether. Here are five ideas to get started teaching your children about financial literacy.
1.) Let them in on what you’re doing
Kids learn by example. Kids are a lot more likely to end up in debt when their parents don’t talk to them about money openly. The fact is, your child’s financial literacy will have a huge impact on her future living conditions and stability. So, talk them through your daily interactions with money. When you buy groceries, tell them how that works. When you use an ATM to make a deposit or pull out cash, explain the intentions you have for that money. Your children are likely to model your behavior.
2.) Play games
You can teach kids about money using board games and online games. Try using board games like Monopoly, Life, or Moneywise Kids to get kids thinking about money on a regular basis. There are tons of online games and apps available that will help your kids learn about money as well. Some examples are Counting Coins, Change Maker, and Piggy Bank. Try out the games before having your child play them to make sure they are age-appropriate, engaging, and have enough financial literacy substance to be deemed helpful.
3.) Let your child earn money for completing extra chores around the house and have them save a percentage of their weekly earnings
Many parents assign their children specific chores to do without the expectation of getting paid. This is a great idea – your child is able to do his or her share around the house. Consider setting up a program for chores that require significantly more time or effort than your child’s average daily chores. For example, you might expect a five-year-old to tidy his room on a daily basis. For something more difficult, like sorting laundry by color or dusting with supervision, he might earn some money. Have your child save a specific amount (say, 40%) of his earnings each week and be allowed to spend the rest on toys, games, or snacks. Encourage him to save up for larger purchases.
4.) Help your child start their own business
This doesn’t have to be a large-scale operation, but starting a business will have a huge effect on a child’s financial literacy. Have them help you add up their expenses and show them how to calculate their profits. This could be a one-time business endeavor, like a table at a back sale. It could be a long-term plan, like selling handmade jewelry or gifts on Etsy. Either way, your child will gain valuable experience handling money.
5.) Get older children familiar with how banking and investing works
Many banks will allow children as young as 13 to open a checking and savings account. Companies like Stockpile and Acorns allow you to start investing with as little as $5.