“Money often costs too much.”—Ralph Waldo Emerson
Our society is preoccupied with money, but on the most superficial level. The meaning underlying monetary choices is rarely discussed. Still, right now, we have a profound impact on our children’s attitudes about finances and spending. It’s useful to take a close look at the wisdom behind the choices we demonstrate to them.
Do our spending decisions reflect our values?
Do our careers foster our own abilities?
Who are our financial role models?
What does it mean to have enough?
Do we have ample time for our families, for activities we enjoy, for quiet reflection?
In Your Money or Your Life, authors Joe Dominguez and Vicki Robin redefine a transaction we take for granted, working. They describe it as trading life energy for money. That life energy is subtracted from the hours we have to live. The same goes for spending. If money represents hours of life energy expended, our use of money also expresses how we choose to literally “spend” our time. Not everyone would agree with the authors’ valuation. But most of us recognize the peace that comes of living in harmony with our own priorities.
Here are dozens of ideas and resources to help you raise money-wise young people.
Start budgeting and personal finance early. Some parents prefer to have all family members involved in running the household economy. They draw up a budget, talk over expenses, and pay bills together. This way children come to know what terms like “interest,” “finance charge,” and “invest” mean as they take part in this family chore, even if at a young age they are only putting stamps on envelopes and discussing what charities to support. Involved children are also less likely to wheedle for purchases because they understand exactly what it takes to save for longer-term goals such as a family vacation. And they see how personal decisions impact financial security.
Use real money. Adding up purchase prices, figuring percentages off, comparing costs, and calculating change make more sense using actual money. Practice at home, then empower children to use these new skills at the bank, farmer’s market, and movie theater.
Learn about economics through picture books. Check out If the World Were a Village by David J. Smith, , Bananas: From Manolo to Margie by George Ancona, A New Coat for Anna by Harriet Ziefert, Sam and the Lucky Money by Karen Chinn, How to Make an Apple Pie and See the World by Marjorie Priceman, Abuela’s Weave by Omar Castaneda, Alexander, Who Used to Be Rich Last Sunday by Judith Viorst, One Hen: How One Small Loan Made a Big Difference by Kate Smith Milway, and Pigs Will Be Pigs: Fun with Math and Money by Amy Axelrod.
Tour local businesses. Field trips open a child’s sense of possibility in their own career aspirations.
Host an entrepreneurial fair. Invite children to create a product to sell. This may be a craft, service, invention, edible item, or work of art. Provide an area to promote and display their wares at a group meeting or public venue. They should have sufficient supplies of their product to meet demand, but as with any business the exact number is an educated guess. You may choose to have start-up meetings beforehand to discuss product development, displays, and other details. Encourage each child to keep track of expenses so they can evaluate the business potential of their product afterwards. Promote the fair to the public, invite extended family, and encourage your group to support the efforts of their youngest business people. Have a follow-up meeting with participants to talk about their earnings in relation to the time and expense of making their product.
Involve young people in a family business. Whether a small-scale Etsy business or a full time company, children can provide valuable assistance while learning what it takes to find customers, keep track of expenses, pay taxes, and build a strong business.
Seek learning relationships with adults who have careers or skills of interest through your own knowledge networks as well as person-to-person learning networks.
Have fun. Invent a new form of currency. Learn about bartering, then try it. Save up for a family adventure by selling things on Craigslist or eBay Turn lunch at home into a restaurant meal complete with menu listings, service, and bill. Write up movie descriptions with viewing times and prices for family video night.
Play board games such as The Farming Game, The Construction Game, Monopoly, Pay Day, The Game of Life, Lawsuit, and CASHFLOW for Kids.
Teach kids to budget. Ensure that children make regular monetary decisions. Talk about needs versus wants, perhaps consulting Jennifer Larson’s book, Do I Need It? or Do I Want It?: Making Budget Choices. As with other learning experiences, young people need the opportunity to think through their choices, make mistakes, and try again.
You might choose to create three budget categories (long-term savings, short-term savings, donations) with your child. Between you, decide on a percentage of money for each category. If your child decides to change the percentage or the amount when his or her income fluctuates, recalculate.
Encourage budding enterprises before your children reach a typical hiring age. They might mow lawns, walk dogs, help parents entertain young children, sell homemade goodies, help with yard sales, assist with computer service, remove pet waste in yards, move garbage cans from house to street and back, rake leaves, be a child-minder during meetings, weed garden beds, set up/explain electronics, help with holiday decorations, watch pets, sell crafts, etc.
Hold a garage sale or charity fund-raiser. Involve children in all phases from planning to follow-up.
Learn how you vote with your dollars. Research products according to health value, corporate responsibility and other standards using Good Guide. Check out how those statistics are gathered and how ethical shopping choices can make an impact.
Invest. With your child, sign up for a joint account on e-Trade or other low minimum investment company. Choose stocks together and watch what happens.
Track mock Investments. Build a mock investment portfolio with your children. Have them list several companies they choose (perhaps related to their interests or favorite products). Help them locate ticker symbols and current stock prices. Every week, help them record the latest prices along with the date. Calculate the gains or losses. These are short-term fluctuations, so talk about longer term trends as well.
You might start a investment club. Using hypothetical funds, members research stocks and returns, competing for the best results. They may wish to use online stock market simulation sites or register for The Stock Market Game (which charges fees).
Build skills and experience through community service. Here are 40 ways kids can volunteer.
Seek out finance lessons. Companies dealing in finance such as banking institutions, insurance companies, and brokerage firms may happily offer a speaker for a group meeting or materials for a class. As with any curricula offered by a business, be aware that there may be implied advertising for the company’s services or tendency to advance the company viewpoint. It’s often eye-opening to discuss this aspect with your children.
Make connections with area businesses. Find responsive businesses and career-related clubs willing to offer programs, workshops, classes, and volunteer opportunities for area youth. Your librarian as well as your local Chamber of Commerce can guide you to organizations, clubs and programs. Again, be wary of educational offerings for kids that are thinly disguised promotions.
Look at the larger economic picture (and remember that economic theory is just that, theoretical). Check out the financial platforms of different political parties. Explore how different countries handled the finance sector failures of 2008 (comparing US to Iceland is particularly interesting). Look at measures of income inequality in different countries. Learn about GNP, GDP, and Gross National Happiness.
Pay attention to the news with an eye to the impact on business and the economy. Talk about differing theories on what factors create high prices, inflation, unemployment, and more. Teens may enjoy Economics for the Impatient by C.A. Turner as well as The Cartoon Introduction to Economics: Volume One: Microeconomics
and The Cartoon Introduction to Economics: Volume Two: Macroeconomics both by Yoram Bauman.
Guess where income tax dollars are spent. Draw a pie chart and allocate resources where you think they are spent or where you think they should be spent. Then compare your chart to data based on actual government spending by searching online for “U.S. federal discretionary spending pie chart.”
Draw up a “flying the nest” budget. Ask teens where they’d like to live and what work they’d like to do in a few years. Your son wants to live on a boat and lead adventure tours? Check out houseboat rental costs and what income he might expect as a guide, as well as regular expenses like food, insurance, and phone coverage.
Take a clear look at college and college alternatives.
Participate in the collaborative consumption movement. It’s about sharing knowledge, skills, and resources. This trend not only helps save money and preserve resources, it connects us to people in meaningful ways. It’s part of what’s often called a gift economy. Teens and up can learn more about this by reading Charles Eisenstein’s wonderful book. Sacred Economics: Money, Gift, and Society in the Age of Transition.
De-emphasize the importance of “stuff.” There’s strong evidence that the more materialistic young people are, the unhappier they tend to be. Research shows that people who hold materialistic values are more likely to suffer from a whole dumpster load of problems. This includes aggressive behavior, insecurity, depression, low self -esteem, narcissism, even physical maladies. And when people place high value on material aims, they’re prone to have trouble with interpersonal relationships and intimacy. Materialism is also related to less independent thinking and lower value placed on being “true to oneself.” That’s a festering mess we’d like to avoid. (For more information and useful ideas, check out Five Ways Frugal Living Benefits Kids.)
Educational Game Resources
The Bakery Shop is a business game for young children, letting them decide what ingredients, baking mitts, and bakers will keep customers happy.
Coffee Shop is a business game for kids 8 and up. Players need to factor in variables including supplies, recipes, past sales, even weather predictions. Find many more math games at Cool Math.
Sense & Dollars is a set of games challenging kids on what they know about earning, spending, and saving money. Charge, for example, lets students choose luxury objects and pick a payment plan. It then calculates the object’s real, eye-opening cost once credit card interest is calculated.
International Racing Squirrels provides amusing financial literacy through the trials of managing a team of racing squirrels.
The Great Piggy Bank Adventure lets players pursue goals through smart saving tactics.
Heifer International enables players to create sustainable solutions to poverty.
Sweatshop provides a wealth of real world moral dilemmas as players work to please bosses in the fashion industry.
PBS Kids Don’t Buy It has a wealth of resources about advertising tricks, the effect of commercials on buying habits, and how to determine what a product is really worth.
The Story of Stuff Project offers programs and resources as well as highly informative videos including The Story of Stuff, The Story of Bottled Water, and The Story of Cosmetics.
Institute of Consumer Financial Education offers quizzes, tips and facts in the “Children and Money” section of the website.
Interactive Mathematics Money Math lets young people find out what a $1,000 credit card debt looks like over time, how long it takes to double money based on the interest rate, and other personal finance calculations.
Junior Achievement (JA) provides volunteers from the business community to present JA curriculum to groups of students. Junior Achievement Student Center is a teen-friendly site geared to help explore careers, learn how to start up a business, and prepare for higher education.
Young America’s Business Trust is a non-profit established as an outreach effort of the Organization of American States.
Econedlink provides classroom style economic and personal finance resources for learning.
Foundation for Teaching Economics offers resources like videos made by kids, easily accessed benchmarks for the US economy, and teaching resources.
HiP provides tips to help entrepreneurs attract new consumers and organizations interested in supporting, investing, and buying from a new business. (Thanks Nick!)
Beyond the Traditional Lemonade Stand: Creative Business Stand Plans for Children of All Ages by Randi Lynn Millward
Money Sense for Kids by Hollis Page Harman
The Complete Guide to Personal Finance: For Teenagers by Tamsen Butler
Portions of this post excerpted from Free Range Learning.