To make the most of your time with your children while they are at home, reinforce the practical life skill of good money management.
If you have school-age children, you are probably one of the many parents facing the challenge of educating your kids at home. While there are countless learning options available — from virtual music classes to videos about zoo animals — financial literacy is one important subject that should not be overlooked.
Teaching your children financial literacy gives them the knowledge, skills and motivation to responsibly manage their money and achieve their future goals. Learning fundamental financial concepts is not always easy, so experts recommend that you start with the basics. Here are a few ideas to get you started:
• Explain that there are three things you can do with money: spend it, save it or give it away. To illustrate the point and introduce them to budgeting, have your child divide up money they receive from gifts or an allowance. Have them pay themselves first by putting a certain amount into savings. Then teach them the importance of giving by having them donate a portion of their funds to a charity of their choosing. Allow them to spend the rest.
• Help them distinguish between needs and wants. With older children, you can do this by giving them shopping practice. You could give them a list of things they need, like new clothes, and a budget to shop for these items online. They will have to decide how best to use their limited resources. Should they buy the designer jeans they really want or a lower-priced option that lets them get everything on their list? With younger children, you might instead have them compare the costs of preparing meals at home (food being a need) to ordering from a restaurant (a want).
• Give them firsthand experience with saving money. Many banks let you open savings accounts online. Set one up in your child’s name and have them monitor it. By the time they become teenagers, the benefit of saving regularly will be apparent because they will have some money to spend on clothes, food and experiences with friends — and still save for college.
• Involve them in creating a financial mission statement for your family. Ask them what they think is important: Is it planning for a future vacation, saving for college or other goals? Having an open conversation with your children encourages them to think about the meaning of money, the challenge of earning it and the importance of saving for what they truly value.
• Underscore the importance of giving. Explaining to children that other people have less than they do and teaching them to give and volunteer helps develop financial discipline as well as empathy toward others. This will help them stay focused on what is truly important, which can have a profound impact on their finances and every other aspect of their lives.