Parents and guardians: It is worthwhile to teach kids about money
By Barbara Pierce
“No one is teaching our kids how to manage money. Managing money is something important that they need to learn. Please help our kids.”
This is what Craig Brown heard when he asked parents what their children needed.
Like Randi Mazzella, online: “When my oldest daughter graduated from college, I was amazed to discover that, though her education helped her secure a prestigious job, she had no clue how to budget, do her taxes, or invest. Her experience is not uncommon.”
Brown, 4-H youth development resource educator for Cornell Cooperative Extension, Madison County, found parents agreed that learning money management basics is important for their kids to learn.
As a result, he planned a budgeting course for 4-H members in Madison County. Unfortunately, due to quarantine, this is postponed. 4-H does offer other opportunities for participants to learn about money and the value of being accountable.
Raising kids with a healthy, positive view of money management, prepared for the real world, involves teaching them a variety of aspects from budgeting to planning, earning and saving. This is a vital life skill and it is never too early to teach kids.
This can start at an early age — teaching delayed gratification while shopping by not caving and buying an action figure at the checkout. It can also occur later on, such as helping a college-bound student establish a budget for books, entertainment expenses, etc.
Here are some suggestions on how to get started:
— Elementary school: Young children are often enthusiastic about earning money. Encourage them to have a project, like a lemonade stand, from buying the ingredients to counting the earnings. Help them understand what they spent versus their profit.
Don’t micromanage; let them make mistakes and learn from their mistakes.
Also, help them earn cash by paying for chores outside their normal routine, like washing the car and mowing the grass.
Today’s parents have an extra hurdle. Thanks to conveniences like debit cards and automatic bill pay, money can be invisible to kids. There are a few simple ways to demystify money, like using cash as much as possible to help them grasp the real value of a dollar.
Have your child set a goal like saving up for a souvenir on that trip to Walt Disney World or that necklace or video game he or she especially wants. Let them see their money grow by using a clear jar. Money from gifts and those extra chores should go in as well.
After the goal is met, deposit the remaining money into a savings account. Head to an actual bank rather than online.
— Middle School: Talk about finance, frequently. This shouldn’t be a taboo subject. Let your kids in on the family’s financial goals — like saving for college, retirement, vacations — and challenges, such as credit card debt or medical bills. It can be a family project to work together toward a goal and see progress.
For example, if the family agrees to save for a vacation, the parents might save to pay for the hotel and transportation; the kids save for special activities, like zip lining or souvenirs
— High school: If your teen’s schedule allows it, encourage him or her to get a job, ideally a summer job. This will provide spending money and real-world experience.
Set a good money management example. Let your children see bills that come in and you paying them. If you review bills together, they can learn a lot. They can see how utility bills fluctuate, depending on the season. Also, seeing the cable, Internet, or phone bill can help them appreciate how much things cost.
Take them along to the supermarket and have them help you examine choices and make decisions.
Teach them to be price conscious. Kids are used to parents paying for everything; it’s eye-opening when they see how much things really cost.
When your child wants a big-ticket item, like as an upgraded phone, use this opportunity to teach how to research prices and determine how long it will take to save enough money to buy it.
— College: Your college student ought to understand a few budget basics before college. Sit down and map out daily, weekly, and monthly costs with them. Debit cards eliminate trips to the ATM, but kids can easily run through the money (Uber rides, pizza) without a tally. Free budgeting apps like Mint can also help your student stay on top of spending.
A chat about how to build credit is key, too. Young adults should understand the consequences of using credit poorly, but they also need to know that credit can be good. Talk about how credit helped you buy a car or house but emphasize that credit comes with a huge responsibility. Give an example of someone who used credit poorly.
There are few gifts you can give your children that are as valuable as sound money management skills.