Parents try hard to balance rule setting and allowing freedom for their children, and that’s also true when it comes to money. When you must navigate working from home, staying healthy, and corralling the kids, there is a lot to think about. Money might be one of those things.
One way to help your family survive and even thrive during the lockdown is to teach them money skills at home. A CNBC survey found that 37% of respondents consider their parent a financial role model. With all of us stuck at home and faced with homeschooling challenges, now might be a great time to open up the money conversation with your kids.
While there are things you can’t control like the pandemic, job loss, or quarantine, you can control the conversations you have with your kids about money. Things may be uncertain in the short-term, but valuable money skills taught at home can last a lifetime. Here are six ways to teach financial literacy to your kids during the coronavirus outbreak.
Learn the value of coins and bills
If you want to teach youngsters the value of coins and bills, a broken toy can turn into a valuable money lesson. The next time there’s a household mishap, let your child know the value of the broken item. Have them count out coins and bills that cover the cost of the toy.
Then have your child work odd jobs around the house to earn enough money to replace the broken item. Make it reasonable and simple. Money has a cause-and-effect relationship. Work; get paid. Don’t work; don’t get paid.
Another teachable moment is to show how much money it takes to live each month. Sit around your kitchen table and lay out your monthly income in bills. You can use real cash or play money, depending on which is more appropriate for your child’s age. Then tell your kids to take away the amount it costs for their allowance if they have one. Next, have them take away the amount of your mortgage or rent. Continue this for all of your expenses: the car, groceries, utilities, toys, clothing, etc.
The kids will quickly see that most, if not all, of the money goes to your expenses. This visual can show kids that money is finite and cannot be quickly replaced.
The power of saving
Saving is a crucial skill that when taught at a young age can have an incredible impact on your financial future. A simple way to teach kids about saving is to open up a savings account that earns interest. This can easily be done online for most banks. Use a calculator to show them how much their money can earn just by saving it.
If you want to sweeten the pot, add a dollar-for-dollar match on deposits. You could set this up at home using a money jar or piggybank. Every time your child saves a dollar, match it with another dollar. The visual is a great way for them to see their savings grow.
Spend, save, and share
You could expand on the savings exercise by dividing money earned into spend, save, and share money jars, with an invest category for older kids. Have your kids add a bit of money into each category as they earn it.
Here’s how the categories work:
- Spend: Money can be used immediately to spend on what they want. Quarantine can limit their ability to spend, so offer to order items for them online. They will pay you with their spend money.
- Save: Maybe your kids want to save for a big item, like a bike or video game. Estimate how much the item costs and how long it will take them to save up. Then have them save for their goal on a weekly basis.
- Share: This money can be used to give to those in need. Perhaps there is a specific charity your family supports. Make it special by having them select which charitable cause they want to support.
- Invest: Older kids could learn how to invest their money in stocks. You could start with a 529 Plan or look into a brokerage account.
Maybe you’d also like the kids to earn money during quarantine by doing extra work around the house that is outside of their normal chores,
Learn the grocery budget
One of the biggest expenses that kids easily understand are groceries. If you want to teach them about the price of groceries, start with the things your kids typically ask you to buy. Since we’re on lockdown, ask your kids to scroll through your grocer’s app to pick out what snacks they want. Then have them tally up the total.
Next, tell them they only have a certain amount to spend on their snacks. For example, you could limit their snack budget to $20. Are they over or under budget? If they are over budget, ask them what they can eliminate to hit their budget. This is where you can teach them about opportunity cost. Simply put, opportunity cost means you cannot spend all of your money on one thing and also spend all of your money on another thing.
Involve kids in the monthly budget
Your monthly budget might look different since the coronavirus pandemic hit. You may be tempted to slow your spending or weight it towards the essentials. Include kids in your monthly budgeting conversation as a family.
The point is to break the taboo surrounding money. Consider that the four money beliefs developed by Kansas State University professors and the Klontz Consulting Group, found that “money is a deep source of shame and secrecy, whether one has a lot or a little.”
Open conversations can lead to some teachable moments. Your kids might not realize how much it takes to keep the lights on or things you save for in your budget. Let them be aware when you take a look at your finances. They’ll see budgeting as a normal activity which can shape how they manage their finances as adults.
Kick off a money movie marathon
Financial movies and documentaries might have a big impact on your family. There are several movies that can spark healthy financial conversations. Depending on how old your kids are, you might look for streaming movies at home such as The Big Short or The Pursuit of Happyness.
There are plenty of documentaries available on streaming services that could be included in your weekly money skill lesson plan. Netflix is currently airing “Dirty Money” and HBO is airing “Becoming Warren Buffet.” Watch together and then start a conversation on what everyone learned after the movie.
Brush up on your personal finance skills
April is financial literacy month. Despite the challenges you are facing in everyday life now, it is still a good time to hone your money skills. Start by checking out free resources on our blog to gain new ideas on how to lower your debt and take control of your finances. The more you learn healthy financial lessons, the more you can pass down to future generations.
- 7 Good Financial Habits to Master (Freedom Debt Relief)
- Saving For College? What You Need to Know (Freedom Debt Relief)
- 10 Money Lessons to Teach Your Kids Before They Turn 10 (Parents)