In making sure children are provided with the basics—love, shelter, food—it’s easy for parents to over look teaching a nitty-gritty lesson like finances. However, the more a parent can instruct their child about money, the better prepared (and hopefully wiser) that boy or girl will be once they step out into the world with credit card in hand.
The thought of getting your kids to sit through a lecture on money may be daunting, but that’s just it—you’re thinking of it as a lecture. In college, I had a very creative Econ professor explain the concept of supply and demand by offering one of us X amount of money and a box of donuts if that person would put on a pair of “Hammer Pants” and dance in front of the entire auditorium (about 500 students). Money doesn’t have to be boring. In fact, money and the economy are fascinating subjects when approached the right way.
Presented here is an outline for a fun and informative evening with the family all about money, where it comes from, and what to do with it. This, however, is more of a bare-bones template. Based on the age and attention span of your kids, you can dive more in depth on various subjects or cut down on the parts they might not be able to grasp just yet (i.e. I don’t know many 4-year-olds who care about sales tax, but you can go for it if you really want to).
The main thing is to make it relevant and relate-able to the kids. Show them just how connected our everyday decision-making and behavior is tied to money. Help them gain financial awareness and do it by using things they care about.
Money Back Then…
- Begin by having kids guess how much the hourly wage was in 1960s etc.( when grandparents had their first job).
- If grandparents are present, have them tell about working and how long it took to save for various goals (car, school, down-payment on house, etc.)
- Have parents talk about their first jobs, too, and how much (or little) hourly wage had improved at that point.
GOAL: Teach children how money comes through hard work and applying one’s self to a task. It doesn’t come easy.
Where Does Money Go?
(This part will work best if you have some help through a visual aid like a white board, play money, or even just pencil and paper)
- Ask the kids what kinds of things the parents need to pay for and about how much they think those things cost (this probably wouldn’t work for little kids, but would be very eye-opening for middle school/high school teens)
- Parents demonstrate (w/help from visual aids) how much money a month goes towards different bills like groceries, utilities, insurance, kid’s clothes etc.
- Give a brief explanation of taxes/what their purpose is.
- Ask kids what they think the state’s sales/food tax is. What percentage do they think is withheld from a paycheck?
- If they’re old enough, have the kids do the math and add up the monthly expenses.
GOAL: Give children greater perspective on the cost of basic living and how quickly it adds up.
Budget, Budget, Who’s Got the Budget?
- Ask the kids to explain their biggest priorities or goals (they might say things like get good grades, improve their batting average, make the school play etc.)
- Ask them what steps they’re taking to reach that goal?
- Explain the goal of a budget, how it helps focus the family on priorities, and aims to cut out unnecessary spending.
- Ask the kids for ways they can each contribute to the family budget goal (some examples are taking shorter showers, turning off the lights when they leave a room, helping cut out coupons for grocery shopping etc.)
GOAL: Teaches them how being conscious of the little ways money is spent can make a big difference. Helps children feel included in a larger, family goal.
Make sure you spend a few minutes discussing basic precautions concerning money, especially if the kids are earning their own money or are close to getting their own bank accounts or etc.
- When it’s appropriate to disclose a social security number or account information.
- Avoiding store credit cards.
- How to investigate deals that seem too good to be true.
- Online shopping and personal information.
GOAL: Teaches them to be cautious and wise when disclosing personal financial information
Applied $ Knowledge $
- Tie up the discussion with an open Q&A between parents and kids. Let kids ask whatever they want about money. This will help the parents gauge the child’s understanding concerning finances.
- If the kids get allowance or work their own jobs, set financial goals with your children for something they’d like to work towards. This is only useful if parents regularly inquire about the child’s progress & continue to encourage them in their goal.
GOAL: Help kids participate in wise money planning, as well as build positive financial habits while they’re young.
Good Times Had By All
End the evening with some friendly competition. Bust out Monopoly or the Life game board. Pass around candy bars like Paydays or 100 Grand for a treat.
Regular “Fun Finance Nights” throughout their childhood will certainly build financial awareness. Hopefully, it’ll even show the kids that mom and dad really aren’t made of money, nor does it grow on trees.
Jesse Mecham is founder of the financial software company, You Need a Budget—because you do! Based on four fail-safe rules, Jesse’s revolutionary software teaches a methodology that helps people break the paycheck to paycheck cycle, get out of debt, and save more money faster. You haven’t budgeted like this.