For this Wellness Wednesday, let's talk for a minute about teaching kids financial literacy. Even our youngest students will be out in the real world in just a few short years, and if you get your first credit card during orientation week at college or after you've moved into your first apartment, you can get yourself in hot water quickly! As adults, we have a great opportunity through the teen & tween years to help kids experience some financial wins and losses that will put them on a great path for early adulthood.
Don't take my word for it! I started getting more into financial literacy in my late 20s, after I'd wasted a lot of money, time, and opportunities. A few years ago, I started listening to a podcast that made the topic interesting and accessible--Stacking Benjamins--and they have a great episode on fun ways to teach kids about money. It's a little over an hour, but well worth a listen if you're feeling motivated.
Put it on my card! One of the biggest risks is how "digital" our money has become. With cash, it's relatively easy to visualize how much something is costing you. But most of our kids will primarily pay with a credit or debit card, if not entirely online or on their smartphones. Some great options to help with this are Greenlight or FamZoo. These apps allow you to "direct deposit" your child's allowance to a debit card. They'll use the card for purchases, but you can set spending limits, monitor spending, and set budgets for different purposes, so you prevent the child from making a huge mistake. (There are also options with lower fees but fewer controls; check out some options here!)
Earning - Does your child earn an allowance? Is it granted, or do they have to complete chores? Some families tell their kids "school is your job right now" and talk about earning an allowance by getting good grades, completing homework, etc. Others will assign a chore in order to earn the weekly allowance. Another model is to post a Wage List and let your kids decide how much they'll earn: take out the trash for $2, walk the dog for $5, etc. Whatever works best for your family, the concept of earning money helps break down the assumption that money just grows on trees.
Living within their means - Regardless of how your kids get their money, they're old enough by now not to rely on an adult for every purchase. The family budget will cover the essentials, but for some personal or special items, let your child decide whether a purchase is "worth it" by making it clear that they will need to pay for it. Will they buy a new shirt when they go to the Plaza with friends, or get dinner at the Food Court? The process of making this decision is an essential step in realizing that some things hold more value than others.
Saving - A good rule of thumb is that 30% or 1/3 of everything they earn should be set aside for savings. This will help your child see how quickly savings can add up, and gives them the power when a special purchase comes along to decide if they want to spend for it. If this habit carries into adulthood, they'll be in good shape to start saving for retirement as a young adult and start building a nest egg. For teens, it will be important to motivate them to delay gratification by saving; this article has some good ideas to inspire them!
If you're looking for more on these topics, there are a number of great books out there. One of our Math teachers, Mr. Boynton, recommends The Simple Path to Wealth by J. L. Collins. If you've got slightly older kids in your life, it's not too late! My go-to graduation gift is The Missing Semester by Gene Natali and Matt Kabala.
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