Real Talk: Family Finances

Many adults have a decent handle on basic finances, (I did not, when I attained adulthood, but I have spent years on a continuous-learning path to understanding). I recall, however, that by the time I graduated, I did not have all the financial tools I needed to be an adult in the real world, and would have benefited from learning these skills at an earlier age.

I would like to offer some tips and simple activities that can be shared with the kids in your life to both introduce and help them become familiar with some concepts of personal finance. These days, there are a plethora of resources on the internet, including a cool, engaging, investing book for kids, but I also want to share tips for interactions with the youngins to impart wisdom as well.

How Soon Could I Start Introducing Kids to Finance?

Honestly, start early. I recommend starting when numbers are at least a mild concept, but even before that, you could start introducing concepts of real-world personal finance into a child’s life. Let your infant or toddler put the credit card into the chip-reader at the checkout line and wait to take it out. Even if that technology is obsolete by the time the child grows older, they will have the practice (if not the understanding) of making a payment and waiting for it to process.

Stop and think about the financial things you do every day. Yeah. Every. Day. You shop, or at least add items to the cart and leave them there (if you are like me), either online or in-store. You check your balances. You work to earn money. You abstain from spending money and, in doing so, save money. You, my friend, are a financial-thing-doing machine. Those simple things you do can be shared with the young ones too.

OK, but HOW do I involve the kids?

I recommend a three-pronged approach; utilizing Talk, Teach and Fun to engage kids in personal finance.

OK, stay with me here. I am not suggesting that you have a Danny Tanner-style discussion with the kids about the dos and don’ts of credit card debt. What I am suggesting is to talk about financial things in your life. My parents never talked about money because they wanted to “shield” me from the pressures of it, but it is a healthy part of life. Tell kids that the super cool trip to the zoo costs money. Tell them that you are working so hard to pay for things like the lights, beds they sleep in, and even the heat that keeps them warm. If you can work these tidbits into normal conversation or answer questions about them without emotion, then kids will understand that it is just part of life. Like, “oh, if I want that fabulous video game, then I need to work and save for it, OK.” You may not even need to go into deep conversations about it, but I recommend working financial information into your conversations with kids.

Here is where there is a bit more pressure. Try and squeeze in real-life situations where you can teach kids. When my now-7-year-old was 4, he was getting into addition at an early age. To challenge him (and also to keep myself entertained so that I did not need to talk about shiny pokemon again… I started with simple word problems. “You got $15 for your birthday and the stuffed Pikachu you want is $45, do you have enough money? Is $15 more than, less than, or the same as $45?” Feel free to modify this as needed based on the child’s level of development, but it is surprisingly easy to find situations where you can easily educate about financial literacy.

Teaching kids about personal finance needs to be fun. If you ask a question and a kid gets it correct, reward them where you can. I don’t mean give them $5, that may be missing the mark of the “lesson.” A high five can go a long way. There are even some books that you can read together to make finances fun like this Money Ninja book. I also love making word problems that are hilarious. I have two sons, who love to talk about bodily digestive functions. If I give them a word problem about 5 people who ate bad guacamole and the store only has 3 toilets left for sale… then we have both a lesson on supply-and-demand and a hilarious poop debacle all in one. Win-win(ish).

Tips by Age Group

Here are some of my suggestions for kids of various age groups:

Infant to Preschool age
Start basic here. Kids are just learning what the world looks, feels, smells, and tastes like. Now is when you let them observe you making financial decisions or doing financial things. Let them help you make the payment at checkout if you have the will for it. Let them see you pay bills online if possible. It may not seem like they are absorbing much, but seeing you manage your personal finances at even this young age may help with their own financial wellbeing in the future.

Preschool and Young Elementary
Make it fun and, more importantly, make it relevant. Kids at this age are very self-centered. My boys are 7 (almost 8), and 5 years old. They care about nothing in life except screen time. For real. So I make them earn it. By completing normal daily tasks, they can earn play money that earns them screen time. I explain to them that I make money by working a full day and doing my best, so each day they complete school without issue they earn $1 in play money and they need $10 in play money for 1 hour of screen time. Certain tasks I *hope* they will do, I assign more value to; for example, my 7-year-old can earn $2 in play money for feeding the dogs. (Spoiler; he rarely completes this task unbidden, but is willing to brush his teeth for $1 in play money.)

This is also a good time to introduce the concept of saving money. If the child in your life gets money for their birthday or other gift-giving special days, then cool new gadget banks like this one that could help toward learning to save and keep track of their money so that they can save up for something they really want.

Older Elementary
When kids are a little older, they grasp the very basic concept of money and need to experience how it works in the world and how they can interact with it. This is the point when I recommend talking about keeping track of their own savings. There are even more cool tools like this ATM for kids that keep track of the money that is deposited and engage kids in a real-world experience of keeping track of their funds.

This is also the point where I recommend introducing the concept of donating with kids if that is something you are interested in. My sons are always looking for ways to help, including spending their snack money at summer camp to purchase snacks for all the kids around them, so I decided to give them a healthy outlet for this. I use a bank similar to this one at home for that purpose. It has the dual-op of teaching my kids to set aside an amount for donation and also separating it from the other needs of spending and saving.

Junior High
By the time kids are in junior high, the likelihood is that they will have full confidence that they know everything about money and you, the lame adult in their life, do not. Fear not, take the pressure off yourself here and try to introduce external financial education experiences into their lives. If you can make game night a thing, you could always play classics like PayDay with them and impart a bit of expectation that way. Or, if you happen to have a child who likes to read, then there are also lots of books, including Finance 101 for Kids that could help them.

This age is about trying to connect with the child on their own level and imparting wisdom in a way that they think was their idea. It is a fine line. Potentially, this is the time to give them a debit card (there are youth debit cards available that are maintained by the guardian, currently for a fee, through trusted companies).

High School
By high school, many kids will need to have a basic understanding of personal finance. In this age group, it will be difficult to teach the necessary basics outside of the school of “hard knocks,” but you can still reinforce understanding of financial concepts. If your high-schooler is willing to have a game night with you, then Electronic Banking Monopoly could be a good way to re-engage. Granted, you will need the patience to carry out a game of Monopoly, which I often do not, and you will also need a willing teen. Outside of that, you could consider having them start a part-time job for spending money so that they become familiar with the feeling of working for their money.

Conversing with kids about personal finance does not need to end after grade 12. Plenty of high school graduates still have plenty to learn about money. This is an excellent time to add your financially responsible teen/adult as an additional cardholder on your credit account or encourage them to open and maintain a credit line of their own. After high school it is very important to create and maintain good credit for the future and this is a great stepping stone that you could potentially offer.

Helping the kids in your life to learn about personal finance might seem like a daunting or impossible task, but you’ve got this. You can make a difference and help the child in your life to have a good understanding and familiarity with various financial aspects of life for their future. It does not need to be boring, but it needs to be taught.

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