Teaching Your Kids About Money - Financial Lessons for Adolescents
We’re moving on in our financial education series for children with part 3, focused on 8-12 year old's with developmentally-appropriate lessons you can give to the “primary to pre-teen” age group. Did you miss parts 1 and 2 of our financial education series for kindergarteners and young children? Check them out here & here.
As you watch your children grow, you realize that everything you say and do has an indelible impact on your child, good or bad. So here are some ways to help you give your 8-12 year-old kids important tools providing them with a solid foundation for understanding the use of money.
In the first 2 parts of this series, we emphasized specific activities that you can do with your kids, to give them the practical knowledge they'll need to use money. A solid understanding of the mathematics in money is essential to help them be able to compare the value of things, and to accurately track what happens to any money they have.
If your child is still struggling with the basic concepts, there are many activities available that will make your child proficient in these foundational skills.
On a side note, if your child is only just starting to develop really strong math, adding, subtracting, multiplying and dividing skills, a really valuable tool to help them compare numbers, and compare value, give them a ‘shortcut’ tool, even while they perfect their skills in computation. Teach them to round up or down when making calculations. Rounding to the nearest ten or hundred, and so forth, allows your child to use the concept of the number, without being bogged down by the intricacies of mathematical operations that are not that strong yet.
Then, they can use estimating, using rounded numbers, to help them grasp the amounts they are dealing with, when going shopping with you, for example. Adults use this technique effectively, all the time, so why not your child! They don't need to pull up their calculator functions just yet, if they have these skills.
Having said that, keep helping them improve their operational math skills (adding, subtracting, etc); an incredibly valuable skill for kids to have, as they begin to participate in transactions using real money with real consequences. The repetition of a poem, or even better, a song, will make much quicker work of embedding those facts!
This age-group is when children are taught more complex number operations, such as fractions and multiple digit multiplication, addition, with and without decimals, etc. With those skills, and some guidance from parents, for example, children can start to apply what they are learning with these lessons, to real life situations.
For example, here’s a good sample question: should I buy a small box of cereal that offers half the quantity, but not half the price?
As your child expands their complex math skills, you can now expand on those shopping trips, where Mom or Dad would explain in general terms why they chose one item instead of another similar one: for example, that they chose to buy a larger sized paper-towels pack because each roll is cheaper that way, or that a more expensive cheese with sharper flavor, will require using less in a dish they love.
As kids get better at understanding how much half is, a quarter of, ten percent of, etc. and as they get more experience with these, the comparisons will start to make so much more sense to them.
Usually, being able to apply their new math skills to new and varied situations, solidifies the skills. Bonus: children will start to see the strong link between needing to practice skills, and the reason behind it; very motivating to kids.
To expand kids’ understanding of how value has been assigned, your kids will enjoy while they learn from a book like One-Cent-Two-Cents-Old-Cent-New-Cent.
Give Kids Limited Money Choices
As your children grow, they will benefit from having access to their own money. Even small amounts, that they can have some limited influence and control over, will provide them with the lessons (sometimes good, sometimes not so good) that are still occurring under the safety of their parents' care.
That is why parents are encouraged to give their children limited choices to spend their money, and to save their money. Living with the consequences of their own decisions (both good and bad) will become potent life-lessons related to managing money.
Give Kids Practice Earning and Spending Money
So kids need to practice spending money, but it is also common to give them experience earning money, to give them a sense of balance around it. Obviously, your child isn't out earning money from a real job.
But many parents attach monetary value to certain tasks around the house, and for these kids, the idea will develop the idea that money is a product of something being exchanged for someone's effort.
Playing lots of great family board games like Payday(r), Monopoly(r) introduces these concepts, and it is reasonable to very lightly touch on your family's expenses (insurance, gas for your car, taxes and/or electricity for your home) that might otherwise be invisible expenses to your kids.
While earning a little bit of income, and by getting some limited examples of how much you are paying for items, but also how much tax is being added, how much fuel you are buying in a month, what your monthly car-insurance fees are, the costs for your water supply etc, your child will begin to form an important awareness of the value of effort as it relates to money.
Letting your children spend their own money on occasion, and in limited ways, will give them the unforgettable experience of having, and then not-having money. It is truly eye-opening for them to discover whether they felt that their spending was worth it to them. Such discussions are highly encouraged within the family, so that your child will grow from each experience.
Books like Money Ninja by Mary Nhin, will also explain to younger kids the various ways they can spend their money, and what to consider when making those choices.
Real Life Earning and Spending
Many children, as a result of social media, are aware of the injustices suffered by people, within their own, and in other communities. It is a credit to their upbringing that they have developed empathy to want to help, and many such youngsters have embarked on entrepreneurial projects to provide aid.
What an amazing learning experience for any child! Whatever their goal, there are many kids highly motivated to try and create something beneficial, by launching projects that will produce real income. While still in the relative safety of their parents' care, and watchful eyes, these experiences (big or small) will give them a profound understanding of the power of money, and of the importance of managing it well.
There’s More to Come
We’re not done yet! Stay tuned for part 4, where we dive into the realities of having a teenager. As always, reach out to us if you’re looking for financial guidance. We’re here to help.