As
a parent of a young child, I want to teach my son how to be
a responsible, productive person in our society. At the ripe
age of 6, he completely understands that the things he wants
are just bought with the money that I picked off the tree
an hour ago.
He
also completely understands that he needs most everything
the marketers tell him he needs between his favorite shows,
The Backyardigans and Power Rangers, on TV.
I
obviously have a lot to teach him about finances and asked
Financial Advisor, Bert Molner from Edward Jones in Bristol,
a few tips on how to teach kids about finances … earning money,
saving money, giving money and making good purchasing decisions.
Here are the tips we thought would be helpful for parents
searching for some solid ideas that lead to great money discussions
with kids and good family fun too …
Bert
suggests using a real Piggy Bank - but one that includes a
few different slots for which to put money in: a Save slot,
a Spend slot, a Donate slot and an Invest slot. Or you can
use four different piggy banks that are labeled with these
choices.
Saving
money without a goal is like running a race without a finish
line - no fun. Have your child decide on a short-term goal,
within a few months, they would like to save their money for
- and then a long-term goal, within the next year; such as
a bike or toy or skateboard. Discuss ways they can earn and
put more money into the Save slot to get to their goals
A
fun part of saving is teaching the opportunity your child
has to earn interest. Encourage them to put their money in
the Save slot to reach their goals and donate a few coins
from your pocket to demonstrate that saving money often earns
more money or interest and can get them to their goals they
listed quicker.
Spending
is the part most kids understand very well - but the trick
is teaching them how to spend within their means or piggy
banks! Help your child make a list of five things they want
to buy and write down how much each item costs next to it.
Then, rewrite the list with the most wanted first all the
way down to the least wanted - in prioritized order. They
should save money for the most-wanted item first!
Label
your child the Superstar Price Detective - encourage him to
compare ads in sales flyers, clip coupons in the paper and
search the internet for the best price he can find on his
most-wanted item.
Charitable
giving is a very important part to teaching your child about
finances - it is good for them to learn and experience that
the more she gives, the more she gets, when she gives for
the right reasons. A good way to do this is to have her draw
a picture of the kind of charity she would like to create
- how it helps people, what her heart tells her is good, why
this charity is important. Then find a charity that actually
matches hers and make a real donation from her piggy bank.
Investing
is tough at any age, but a great way to teach this concept
is demonstrating the difference between saving and investing
- saving is shorter term, and investing is longer-term saving
for the future (college, a car, a home). When he invests in
good things, good things will usually come back to him. He
may want to invest a few dollars towards your family's groceries
each week, and at the end of a year, you could calculate the
money he invested and the whole family gets a special dinner
at a favorite family place as a result of his investment.
Another
good ways to teach investing for the future is this analogy:
Which company would he be smarter to invest his money in?
A boy who is going to open a lemonade stand during winter
or a girl who is starting a dog-walking service on a street
where 5 dogs just moved in? Have your child consider the differences
and choices with this analogy and understand why the girl's
business is best to invest in and what his investment could
do for that business and his return.
Learning
about money can be fun for kids and can teach us adults a
thing or two in the process. When your child receives money
for allowances, birthdays and gifts, encourage them to split
up their money into the four Piggy Bank slots to reach their
goals. Positive reinforcement of these concepts will help
to mold your child into a responsible, hard-working adult.
They watch every move we make, even with our finances; so
the way we save, spend, donate and invest is typically the
path they will learn to follow.
