Whether we realize it or not, our financial habits, fears and perceptions
about money are internalized by our children. If we teach our children about the value of being frugal, but we regularly purchase the latest model car or iPhone, those philosophical lectures will have little impact. If we teach our child to judge people by what’s inside and not what brand of clothing they wear, but that later remark in a condescending way about someone’s bargain-brand shoes, we’re asserting that brands do indeed matter.
The best thing we can do as parents is to bring our actions in line with the values we want to instill in our kids. This requires some self-reflection. Identifying areas where we have perhaps not been as intentional or responsible as we would have liked, can become teaching moments for children. If we demonstrate a commitment to positive change, children will intuitively understand. For example, if I habitually make impulse buys at Target instead of purchasing only the detergent and light bulbs I planned to purchase, I can use my moment of weakness as an opportunity to talk about the negative impact this has on our family finances. This lecture won’t stick, of course, if I don’t change my behavior. The lesson is even better if it leads to a positive result. For example, what if our family can afford a special day trip because of our discipline at the checkout counter? Success.
Here are some important age appropriate experiences to encourage financial literacy.
AGES 9 TO 12
• comparison shop—read price labels, compare the bulk amount per cent, try a brand name and a generic brand
• attend or host a yard sale—assess the value (for pricing or purchasing), experience what it’s like to negotiate over prices
AGES 13 TO 15
• create and stick to a budget—this can be for hosting an event, a grocery store trip or purchasing supplies for a project
• start savings jars or accounts—show how small regular savings (birthday money and money from babysitting or odd jobs) can add up over time
• discuss tradeoffs—talk about needs versus wants; have your teen choose to forgo one thing now in order to have something else they want down the road
• give to charity—empower kids to donate a small amount to a cause or family in need
• purchase personal gifts—have teens use their own funds for a birthday or other gift they are purchasing for a friend
AGES 16 AND OLDER
• invest in a company—help them (actually or virtually) pick shares of stock in a brand they know and like
• pay taxes—explain how various taxes work (state and federal income tax, sales tax, FICA, etc.) and, if your child has a part-time job, how their paycheck is affected
• contribute to retirement plans—discuss the value of 401k or IRA contributions
• provide exposure to credit cards—start with a prepaid card (like a VISA Buxx); if they are away at school, only allow use of credit if they pay it off each month or stick to a predetermined budget
• apply for financial aid/scholarships—if your child is headed to college, include them in the financial planning process
Many online tools can help. Mint.com has a list of resources for teaching kids about money, mint.com/ultimate-resources-for-teaching-kids-about-money.
Also, check out myjobchart.com, an inter¬active online tool that helps kids learn about financial responsibility, managing money and contributing to causes.
Lyn Dippel, JD, CFP®, president of FAI Wealth Management, provides financial planning and investment management for transitions such as retirement, career changes, sale of a business, relocation and inheritance