Teach your Children about Finances Part – II
Children and teens need more financial savvy as they get older. They start earning more money and they have more expenses. They are also ready for more depth in their financial education. While it’s important to teach your children about finances, it’s also important to let them make a lot of their own decisions (within reason) about money. Experience is a great teacher!
1- Help your child set some goals. Discuss with your child some financial goals and write them down. Post his goals in a place where he can refer to it often. If your child has goals to work toward, he is less likely to squander his money away on consumables.
2- Help your child budget. Get some sort of notebook or bill book to keep track of expenses. My oldest son has a composition notebook that he uses to write things down. Each month, he writes down all the expenses for the month. He also writes down his earnings and he figures out where to allocate his money. Any extra money goes into a savings account.
You could also have your child save receipts to help track spending. It can be a real eye opener to really see how much money went toward buying soda and potato chips!
3- Read and discuss good books on money. There are lots of wonderful books about money. Give a list of book options to your child and let him pick one to read. Plan a date to discuss the book (you will need to read it too!) I like to take my child out for an ice cream cone or for a walk in the park while we discuss the book. Ask your child what he liked or didn’t like about the book. What did he learn? Did he agree with what the author had to say? Try and pick a new book to read each month.
Here are some of my family’s favorites:
- Rich Dad, Poor Dad for Teens
- The One Minute Millionaire
- Growing Money
- The Kids Business Book
- If you want to be Rich and Happy, Don’t go to School
4- Play games together. Games are a fun way to learn about money. My kids especially like playing Monopoly. Robert Kiyosaki’s Cashflow for Kids is another good one to play.
5- Let them pay for more of their expenses. Kids learn best by doing. Let your children pay for some of their expenses. Once kids are in charge of paying for their own things, they learn how to be frugal in a hurry!
6- Teach your kids about investing. Let your children do some research on different types of savings accounts. Take them to a bank or credit union to discuss some different options with a financial advisor. Teach your kids about the Stock Market and let them do some research on different companies.
I recently found a simulation game online called The Stock Market Game designed to teach children to learn about investing. Kids are grouped into teams and they “invest” play money on real stocks. See if your child’s school would be interested in participating in the next simulation scheduled for October 2008.
http://www.stockmarketgame.org/index.html
As you teach your children about money, you will find that you have more financial savvy yourself.
Related posts:
- 5 Ways to Teach Little Tykes About Finances
- Arm your Children with Financial Knowledge
- Six Ways your Kids can Help out with the Budget!
- Should You Keep Separate Finances?
- Can the Rich Teach The Rest of Us Anything About Money?
My parents started me off on $1 a week for an allowance (which bought a lot more back then than it does today). If anything, it taught me how to budget, so I could buy cool erasers at the school store. :-)
This is a great post. We just started giving our kids (6 and 8) a $1 a week allowance, just to get them to start talking and thinking about money. I believe the lack of financial education in our country is a national security issue and should be given a much higher priority.
I agree with what you’ve written here, and I have to say: if more parents did this, our country would start looking a lot different! The best thing my parents did, I think, was live by example.
These are some great comments. I think the country would be a different place if children were taught more about finances.
Another good book is called, “The First National Bank of Dad”
http://www.amazon.com/First-National-Bank-Dad-Teach/dp/0743204808
Basically, you start a bank for your munchkins offering 5% per month. This gives kids an interest rate they can see giving them money every month (since a year is a VERY long time as a kid).
In my bank I do the accounting part once a week on Saturday with their allowance, so I offer 1% per week (which can be 5%/month if there are 5 Saturdays that month) – just to keep the math simple so they can understand it. My oldest (6) has done the lemonaide stand and sold some of his toys at a garage sale just so he could have money in the bank. Grandma started him off with $40 one month, and that jumped his weekly interest by $0.40 – he was excited. :)