A few years back, I found this fabulous blog by Alison Van Dyke, and each time I read it I’m reminded how current the ideas still are today. She was a fee-only financial planner in San Francisco who worked specifically with new parents. The ideas she posted are easy, fun, and best of all- help your children build some of those goal setting/goal meeting values that we all hope our children will have. So… in lieu of listening to me today, let’s read some of her ideas.
From Allison VanDyke:
Despite the rain and cold that we have been experiencing in the Bay Area, summer has definitely arrived as many children have already finished school and have started enjoying the “lazy days of summer.” While my family enjoys the time off from our daily rituals of homework and preparing lunches, we do look forward to using our free time to practice other types of reading and math skills – and this always includes learning about financial responsibility (although I don’t generally advertise what we are really doing because that term just doesn’t go with popsicles and running through the sprinklers).
For the past few summers, I have used a book called Raising Financially Fit Kids, by Joline Godfrey to teach the concepts of money to my children. This book outlines by age group a number of activities that you and your child can do together to learn about the value of money as well as provide a foundation for financial literacy. As Ms. Godfrey explains in her book, her goal (and my goal with my children as well) is to help parents teach their kids to be financially independent, balanced, and responsible members of society who contribute to both their family and community.
Similar to thinking about your personal financial situation, teaching children about money can be overwhelming, too. Just remember – keep it simple and focus on a few goals for your child. Of course, the goals and activities vary for each age group.
I pulled together ten of my favorite activities (some from the book, some from other sources) that I find very useful and easy to do especially during the summer months. Some are geared for younger children, others may be too advanced for your child right now. Try one – or many – out!
- Make a “piggy bank” with some type of box such as a shoebox. Have your child decorate it with his favorite colors, stickers, etc. Have three separate sections for spending, saving and giving.
- Work out a weekly allowance, but explain to your child that this money is not an entitlement, but a tool to help him learn how to manage money. Decide ahead of time how much you pay each child (we determine it based on age – the 8 year old receives $8). Then determine with your child how much of the allowance goes into spending, saving and giving. We also try not to tie allowance to household chores – our children do these jobs because they are part of our family. Identify projects that your child can help with to earn additional money.
- Talk to your child about money – discuss where that money really comes from when you get it from the ATM or talk about why you choose to spend your money on one thing versus another item. When you walk through the grocery store, have your child look at the price of an item so he knows how much something really cost (and maybe he will really drink that whole cup of milk next time!).
- Buy a pretend cash register and explain all the different forms of money. Use real money too. Give your child the pocket change from your pockets or purse – have him add it up and then put it into the saving bank.
- Help your child get his first library card and explain that borrowing books is kind of like borrowing money – you have to return it, and pay a fee if you don’t return it on time. Using the library is also a great way to demonstrate saving money – the money your child saves from not buying books or movies can be put in his college savings account instead.
- Buy (or help your child buy) a wallet. Bring this wallet along to the store and use his spending money for that requested toy or ice cream. Don’t forget to put the library card in the wallet too and bring that to the library.
- Have your child pick one item in his room to give away to another child who might need it. Take a field trip to a local family homeless shelter where your child might be able to see other children who he will make happy with his donation.
- If your child is old enough, give him an amount like $30 (or have him take it from his giving fund) to shop with at the grocery store. Have him shop for food donations that you can deliver to a local food bank together as a family. Have him add up the items he plans to purchase (aka practicing his addition and budgeting).
- Finally, have your child be that entrepreneur and set up a lemonade, cookie or snow cone stand. Explain to your child that you will be an equity partner and that you will provide the money for the cost of goods sold. Help your child determine how much it will cost for each item sold and how much he needs to make to cover his costs.
Most of all, keep it simple and fun and enjoy that lemonade!
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John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals. For more information, visit http://www.chladekwealth.com.