Tips for Raising Financially Fit Kids

At 8:20 a.m. on the nose they raced into the classroom, 25 spirited kindergarteners. They paid no attention to me as they stuffed their jackets into their cubbies and made their way to table time. This morning they found pennies and cardboard cards showing different coins at their table. Ten minutes later their eyes would be on me.

This sunny morning my job was to explain money to Becca and Carrie’s kindergarten class.  At five and six years-old, they are ready to start grasping financial basics.  As they gathered in a circle around me, on a big blue rug, I saw just how hungry this age group is to learn about the topic mom and dad seem to know so much about – money.

Make it Visual

The first rule for teaching about money to five and six year-olds is to make it visual. I pulled out a debit card, a credit card, a check, and a few dollar bills. I asked the kids which of these objects were money.  The dollar bills were picked first, but others thought the cards and check were also money. They had seen their parents use them to buy things at the store.  That was my opportunity to have a teachable money moment.

The bills and coins are money. The other items are tools that help you pay for things but are not money. The debit cards and the check are convenient ways to access your money when you go shopping and you are not sure how much money you will need or don’t want to carry that money with you.  But, if you don’t have cash in the bank – those tools won’t work.  They got it.

Six year-old Olivia asked: “Does that mean the worker at the store has to run to the bank to get your money?” Great question! It was an opportunity to talk about how businesses work (a bonus money lesson). I told her that stores collect all the checks they receive during the business day and then make one trip to the bank. She was relieved to hear the workers didn’t have to run back-and-forth 100 times a day!

The last tool we discussed was the most abstract – credit cards. I asked what the kids knew about them. And they didn’t have too much to say. So I explained that a credit card is not money at all, but an easy way to borrow money to buy something. But I said if the borrowed money isn’t returned quickly, the thing you bought will get more expensive.  The lesson for using a money tool like a credit card, is to not use it unless you will have the money to pay it back soon.

When you talk to your kids about money tools like checks, debit or credit cards, explain the safety issues just as you would with other tools like a hammer or a saw. When money tools are used safely they can help to make big jobs a lot easier. But if they aren’t used safely they can end up causing problems – problems that could make paying for treats or special things more difficult.

Tricks for talking about money to other age groups

Preschoolers

I start my money lessons with preschoolers because I think the earlier you get in the habit of talking to kids about money, the smarter they will be. The visual rule works with this group too. I love to bring in banks and to have them draw pictures. Tell your kids to draw a picture of something they want. Then have them draw a picture of something they want to give. Using an image that matters to them, you can talk about how it takes money to buy certain thing – and that other things, like hugs and kisses are free. Encourage your preschooler to start saving their pennies and those cash gifts that come in birthday cards or their allowance.

7-12 year olds

I love playing the grocery store game with kids in this age group. It can be modified to fit their level of understanding. Here is how it works: Have them help you write a list for the grocery store shopping trip (great bonus lesson – because it will teach them not to go shopping without a list). Next, have a rough idea of what these groceries will cost (keep your previous receipt for some help here). Then, tell them if they can help you fulfill your list for less than the total you wrote down – they get to keep the savings. This game teaches them to really look at prices when you shop and to understand that choices have to be made to keep you within a budget. Allowing them to keep the difference is incentive to save.

Teenagers

I like to use the idea from the grocery game and apply it to clothes and technology – areas where most teens spend, spend, spend. Making a list before they go shopping and encouraging them to find cheaper alternatives to things on that list – then letting them pocket the difference – will help them prioritize their spending. Forcing teens to live within their allowance also shows them the basics of managing their own finances.  Remember, they are awesome negotiators, so once you’ve decided the wallet is closed for the week – stick to your guns. No matter how tough it is!

For all ages

Make sure you say no – regularly. It isn’t easy telling your baby they can’t have something. But the earlier you start saying no, the easier it will be as your child ages.  Even if buying that extra doll or pair of jeans isn’t going to break the bank, still find the strength to say no.  I often say things like, “I don’t think you need it” or “it is not something I think our family should spend on today.” It shows that it is not a matter of being able to afford something – but a bigger reason you aren’t buying it. It is not something that adds value to your family.  Eventually your kids will learn to think about how much value the things they buy bring to their life.  And that is a money lesson they can keep for life!

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    About Mary Mary Caraccioli, MLA, MBA is the Money Confidante. An Emmy™ Award winning financial journalist, she has worked at CNBC, FOX, Comcast and ABC's LiveWell TV where she has created numerous award winning programs. Mary also helped to create the Lou Dobbs syndicated radio report. She was an early adaptor of digital media and creator of well respected money websites.

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