April is Financial Literacy Month—the perfect opportunity to teach kids about money as we inch towards summer. They'll want to go to waterparks and baseball games with friends and enjoy other activities, and they should learn now how they can afford to do all those things. In teen lingo, I understand that kids are all about "swag," and I agree—kids really do need SWAG. However, the swag I'm referring to isn't sass or attitude. It's Savings With A Goal.
As a mom and Certified Financial Planner, I know it is important to raise financially savvy kids. How can we teach children about financial literacy early on? There are apps out there to help with this, but hands-on learning is quite valuable. Making your financial lesson an experience that inspires creativity and reflection can leave a lasting impact on your children.
Here are five fun ways to teach your kids about money:
1. Remember the past.
Children need to know about their family's history, including the struggles and victories. Talk to them about how you grew up and what you were taught about money. And explore more of the family tree. Have your child look up a relative's career 20 years ago. How much did they earn? What were the conditions like? What education or skills were needed? And what does the career look like today?
You can also research life for a teen back in a specific decade. What did kids do to earn money? What types of activities were available? The point of the exercise is to teach children how times and finances have changed over the years.
2. Pinch pennies.
On a nice day, have your child look for spare change in the neighborhood as you walk together or around the house when it's not so nice out. How much money did he or she find? Collect it all in a jar that you decorate together. As a family, decide what that savings will be used to fund. Perhaps a movie night or pizza dinner? Keep adding found change to the jar, and each week, sit down with your child to discuss how much money is in there. If he or she needs pocket money, you can take money from the jar, but explain to the child how taking from savings impacts the fund and the time it takes to reach your goal.
3. Plant an idea.
Money doesn't grow on trees. Who hasn't heard this phrase come out of your parent's mouth? Take your child to a gardening store, and buy seeds and other equipment. Explain how in order to save money, you need to start with an idea seed. Plant a seed with the child, and discuss how savings requires responsibility, care and patience, similar to growing a flower or tree.
4. Start a really small business.
Discuss how some people venture out and start their own businesses. Have your child come up with a skill or hobby, such as making cookies, creating friendship bracelets or knitting scarves (opens in new tab). Together, you can research the costs for materials, such as chocolate chips or yarn. Then, think about a kiddie business plan. How many items do they want to make? How will they sell the items, and what should they charge?
While supervised, allow your child to make a stand outside to sell the products. At the end of the day, how much did you sell? Deduct the amount of the materials from the grand total. You can use this as learning opportunity to teach kids how businesses earn profits. Plus, your children can enjoy a sense of pride from earning their own money. Foster that feeling and encourage them to come up with other ways to earn more.
5. Connect with your community.
Explain to your children how money helps support community organizations and how helping others is a great way to give back. There are programs such as Kids Enjoy Exercise Now (KEEN) (opens in new tab), which matches a volunteer with an athlete who has a disability or other mental or physical challenge. It helps kids know how wonderful it feels to volunteer and may inspire them to come up with a fund to support a cause.
Whatever activities you and your kids like to do together, look for opportunities to talk frankly with them about money and create teachable moments. The more financial literacy you can give them when they're young, the greater their chances of achieving financial independence when they grow up.
Marguerita M. Cheng is the Chief Executive Officer at Blue Ocean Global Wealth. She is a spokesperson for the AARP Financial Freedom Campaign, a CFP Board Ambassador and proudly serves on the FPA National Board of Directors.
Marguerita M. Cheng is the Chief Executive Officer at Blue Ocean Global Wealth (opens in new tab). She is a CFP® professional, a Chartered Retirement Planning Counselor℠, Retirement Income Certified Professional and a Certified Divorce Financial Analyst. She helps educate the public, policymakers and media about the benefits of competent, ethical financial planning.
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