There are certain things parents know they need to teach their kids before they go to school: how to use the bathroom, feed themselves, tie their own shoes and put on a coat. The National Endowment for Financial Education also recommends that parents start teaching their kids about finances by age 5, as well.
Learning to manage money is a lifetime skill and good habits, just like teaching good manners, have to start young. A Harvard study actually found that teaching kids personal finance in school has no impact on their investing or savings decisions because they learn most lessons through the example of their parents. But, where to start with kids as young as 5? You can’t dive right into 401Ks, mortgages and credit card rewards, so what can you teach? Actually a lot, just by involving your kids in daily activities like grocery shopping, paying the bills, even household chores.
Check In at Check Out
When you are ready to swipe your card at the grocery store check out, engage with your young kids and grab their attention by letting them help run the card through the machine. Then explain that the card is a key that unlocks the money from your bank account and gives it to the store to pay for your items. This will get your kids thinking about how digital money works.
Schedule Computer Time
The next time you log in to pay your bills online, have your kids help, too. Show them where and tell them what to type into the fields and explain along the way what paying that bill means for the household. Of course, double check their work before submitting the payment to make sure there weren’t any accidental errors! Also, be sure to show your kids how your bank balance changes as you pay each bill so they can see the money trading hands.
Hire Your Own Kids
While your kids may be way too young to have a real job, you can still help them learn the correlation between work and reward, the meaning of responsibilities and how pay day works by hiring them around the house. Give your kids a set of jobs they need to accomplish each day or week, assign a dollar value they can earn for completing them and then each Friday, pay them based on their success. You can go a step further with older kids and have them break their pay into spending money and saving money.
Society is trending toward 100% cashless transactions. Help your kids be ready to function successfully in the adult world by ditching the piggy bank or weekly cash allowance. Instead, put birthday cash or money earned from chores on a gift card for a favorite retailer. Have your child pick out an item they want to purchase and use the card to save up for it, then make a purchase in-store or online.
— By Gregg Murset, CEO and co-founder of BusyKid.com. He is best known as the inventor of My Job Chart, the first electronic chore/allowance platform, which grew to nearly 1 million members in four years. A father of six, Gregg is a certified financial planner and consultant. In 2014, he was named Chairman of 2014 “Smart Money Week” for the state of Arizona, as well as the National Financial Educators Council Financial Education Instructor of the Year.