Tuesday, April 15, 2014

How to teach your kids about money

Teaching your kids about money can be (dare I say it) fun!
Illustrations by Phoebe Thomas for love, -j.

Benjamin Franklin, in his letter to Jean-Baptiste Leroy in 1789, wrote, "Nothing can be said to be certain, except death and taxes." Sardonic as this proverb may be, it's probably on everyone's mind. Especially today.

Tax Day got me thinking about the concept of money. How hard it is to make. How we spend it. How important it is to save. In our house, we make it a point to be open with our children about money. All questions ("How much money do you make?") and issues ("Why should we give our money away?") are on the table.

But how do you start those conversations? I sought the advice of local expert Rodney Drake, VP of Consumer Segment Strategy at Cleveland-based KeyBank, and he offered these super simple, super helpful financial tips.    

Even as early as age 3, children can start thinking about how money is used to pay for things. And don't be surprised if your child displays his or her inner-bookkeeper. "Accountants are born, not made," says Drake. 

tip: Next time you're at the grocery store with your child, invite her to compare prices with you. Take fun items (like cereal or her favorite snacks) and ask which products are most expensive, least expensive, etc.    

Sort change with your child so he can learn the difference between pennies, nickels, dimes and quarters.

tip: Use small mason jars (like these) and have your child make labels for each type of coin. Hearing the plink, plink of the coins as he sorts change is sure to be an exciting activity! 

Consider providing an allowance at ages 5, 6 and 7. "This is a good time to help children set priorities and to reinforce personal family values," says Drake. "Encourage them to allocate their allowance to savings, spending and other -- such as charity or sharing."

tip: A $2 weekly allowance could be divided as follows: 80 cents for personal spending; 20 cents for charity/sharing; $1 for savings. "Parents can support savings by offering an incentive," Drake recommends. "[Have your child] set a savings goal and agree to match it when the goal is met." 

School-aged children can start learning the difference between spending money on something they want versus something they might need.

tip: Parents can reinforce wants vs. needs by watching TV/Internet commercials or looking through print advertisements with their children and talking about the products, how much they cost, how long it would take to save for that product, etc.    

Isn't the artwork just fantastic? A big THANK YOU to the lovely and talented Phoebe Thomas for her original illustrations for love, -j. Find out more about Phoebe's work here.

5 things to do for your kids. Every day.