Proud moms and dads across the country spend millions of dollars every year on their children’s education, beginning with private grade schools and continuing to Ivy League graduate programs. One would think that with the amount of money Americans spend on education that Personal Finance, one of the most important areas of life, would be addressed. However, this is not the case.
The financial world is more complex than ever, and it is up to parents, friends, advisors, colleagues, everyone to help educate our youth on one of the keys to having a successful and enjoyable adulthood. With the lack of financial literacy and the rising cost of college tuition, it is no surprise that topping the list of college student’s worries is money. The National Student Financial Wellness Study (released by Ohio State University – 2015) found that 72% of students felt stressed about their personal finances. One in five college students expect to graduate with loans of more than $50,000.
Now is the time for us to educate our kids so that we can ensure that their future is bright and also so that our amazing nation can continue to provide the American Dream.
Here are some ideas to try with your children:
Let your children purchase products using cash. By having a tangible object and then having it “disappear” allows children to see that there is a true cost to everything. Swiping a credit card doesn’t teach much of anything.
2. Piggybank 2.0:
Everyone remembers having a piggybank that you would save your money in; however, that doesn’t exactly teach much about money management. A better idea is to have a separate piggybank for each of the following areas:
i. Money to save
ii. Money to spend
iii. Money to donate
iv. Money to invest
3. Chore Bulletin Board:
Have a bulletin board with chores that need to be done around the house with money hanging below each task. It doesn’t have to be much, it could be $0.50 to take out the garbage or $1 to clean their room, but by doing this children will associate having to work for money. Rather than giving kids an arbitrary allowance each month they can see that with work comes money.
4. Charity is a Family Event:
Getting involved in your community as a family will teach your children that giving your time or resources to those less fortunate can be fun, rewarding, and will bring you closer as a family. Consider donating a few hours of your time at a soup kitchen or Salvation Army type organization.
5. Understanding Risk & Reward:
Consider taking some of your children’s money that they have earned and invest it in a large cap stock such as Coca-Cola. For a child that’s 13 years old or more, this can be an extremely valuable lesson teaching risk and reward. The child will see what it feels like when the stock decreases and increases and therefore “grows” or “loses” some of his/her investment.
The bottom line is that our kid’s futures depend on us doing everything that we can to pass along the financial lessons that we have learned along the way. Financial stress is extremely taxing and takes away from what’s truly important in life. Shouldn’t we do what we can to help?