But not everything is lost because this gives us parents a great opportunity for a variety of teachable moments. And one of my favorite things to do to teach my kids is finances. I understand that finance can still be a semi-taboo subject in some circles, but it is extremely important to teach our children this extremely diverse and complicated topic while they are still young.
So now is a good time to create lots of educational financial moments with your children as they are stuck at your home. And to make things a bit easier, I’m going to break them down by age.
But to give you a little glimpse – here are the best ways I can teach my kids at different stages of their childhood:
- Grocery list and food budget.
- Allowance budget.
- Paycheck with taxes for housework.
- Create birthday budget.
- Price and sell their old things and invest in their future.
- Set up a Roth IRA and teach them how to invest.
- How much does your car really cost to drive annually.
- Let them do your budget.
- Create a college budget.
- Diversify your sources of income.
This may sound like an intoxicating list, but these are lessons that can be taught in smaller increments over the years as you get older.
But why is it so important to get your kids interested in finance while they’re young?
Why it is so important to get your children interested in finance
As parents, we all hope that our children are ready to fly when they are 18 years old. At least that’s the dream. If you don’t teach them everything they need to know to be ready for the big bad world alone, you can just set them up for failure. This applies in particular to finance.
Learning how the world works financially is not innate knowledge. It has to be taught. And since children reflect adults in their lives, if you don’t teach them about finances now, your children could get into trouble.
Starting financial education as early as possible can only help your children succeed in life. I know that when I was young I was taught more about finance than most of my colleagues. But it was still not enough to save me from big debts and big financial mistakes in my late teens and early twenties.
So, as a parent, my goal is to make sure my kids are smarter financially than I am. I want to do what I can to give them the tools to hopefully avoid the financial pain I’ve been through.
It boils down to teaching me financial lessons since they could count. And over the years, the financial lessons have only progressed. To the point where my kids had a lot of opportunities to teach other kids about finance. And that alone makes me happy to think that they hear at least one thing I’ve tried to teach them.
Elementary school students
When your children are younger, the financial lessons you can teach them are much more elementary. But you have to start somewhere, and at this young age it is extremely important to create a good foundation for your financial house. Children are very impressive in elementary school and still think adults are superheroes.
So this is the time to be as open as possible with them about finance and what you know. And if you don’t know the answer to a question, it’s best to look it up together. This teaches your child that although they still consider you superheroes, you are not omniscient.
And it’s okay not to know the answer to something. After all, it only helps to learn something new together to strengthen the bond between parents and child.
Help create a grocery list and grocery budget
One of the simplest financial lessons is grocery shopping. Since my children were about two years old, they have been helping me make a grocery list. The best way to do this was to let them go through the pantry, fridge, and freezer to tell me what they thought was necessary.
As they get older, ask them about their thoughts on the meals and ingredients to prepare those meals. Once they’re old enough to figure out what ingredients are needed, they can start breaking down how much each of those ingredients costs.
The older they get in elementary school, the better their math skills become. That said, they can help you figure out yours Food budget. Just let them know how much you have budgeted for groceries a month, and then they can help you figure out how much can be spent where.
This is a great lesson to teach them while still young to prepare them for their first few years alone.
Make an admission budget
Another great way to teach primary school kids about finance is to give them an allowance. However, if you give them the allowance, one of the constraints is to budget for it.
Many parents I know let their children divide their allowances into three categories:
- Save up.
These are extremely simple categories to start budgeting with. I would first ask them how much they think they should budget per category to start the conversation. Ultimately, every parent and situation is different, so we don’t all have the same idea of how the budget should be divided.
But how I structured it at that age was that they budgeted 40% for saving, 40% for spending, and 20% for charity. This just made math a little easier for them.
No matter how you let your children divide up the budget, only the conversation is an important teaching tool.
Give them tasks and a paycheck with taxes taken out
Another way to do this is to give them jobs and a paycheck with taxes taken out. Depending on the situation, this can be done instead of an allowance or additionally.
Children have difficulty understanding taxes as this is still a foreign word. So giving them a paycheck for housework and taking out the taxes can really help bring this concept home.
When children do homework or receive an allowance, they usually receive the full amount. So, explaining how taxes work for us in the adult world can help reduce the shock of their first real paycheck when the time comes.
While tax rates for withheld government taxes change and vary by state, current tax rates for the following are:
- FICA – 15.3%.
- Medicare – 1.45%.
- Social security – 6.2%.
This math may be a little difficult for your elementary school child, but you can count on them when they’re younger. Or, you can simply add up the average withholding tax amount and instead calculate the remaining amount that is actually paid.
Regardless of how you choose to do so, it helps your child understand that he or she is unable to keep the full amount of money that it deserves. And that’s an extremely important financial lesson that you should learn early on.
Middle school students
When children come to middle school, their math and problem-solving skills increase. This is absolutely fantastic because you can start teaching them more advanced financial topics.
Of course, this also means that you have probably heard about financial matters from your friends. This means that there may be a lot more questions about your finances and why you are doing things the way you do.
This is a time to be as transparent as possible as children are still quite curious and have a real thirst for knowledge. This can also involve many questions that may be financially above your head.
So continue to solve the answers to these questions with your child to include them in the process. The longer you can keep the informational dialogue with your children open, the more they can ask you the more difficult questions instead of just believing what your friends have told them.
Let them create a birthday budget
As children get older, gifts become more expensive. However, they usually don’t have a job to fulfill these more expensive desires. So it’s a great way to budget your birthday gifts to mitigate that surge.
The older they got, the more electronic devices they wanted for us. And let me tell you how much more expensive these are than toy trains. Exponentially more expensive!
When they started asking about such things, I let them know what the budget was for each of them.
I tell every child that they can find gifts that they want in the $ 20 and $ 50 range. You have to come up with different options and email me the links. Or if everything you want is on Amazon, I will create a gift list for you and you can enter all your birthday gift wishes there.
Sometimes what they really want is above the individual budget, so they can ask everyone to pool their money to get the bigger item. Sometimes we did, and sometimes it was just too far outside the price range.
And when the latter situation arises, the children have gotten creative with their problem solving to try to get the more expensive item. A good example of this is when two of our guys wanted an Xbox but the budget just wasn’t there. They asked if we could all pool our money and split it up for both of the boy’s birthdays, rather than just one of them.
The whole family agreed that we could do that. But it was still a little over budget. So the boys decided to have a farm sale to sell some of their old things and make up the difference. We found this to be quite creative and agreed. They ended up getting the bigger gift they wanted, and we had to teach them how to budget for larger items.
Teach them how to value and sell their old things and how to invest the money in their future
As soon as a child reaches middle school, many things start to change at the same time. And a lot of it includes things they’re interested in, as well as clothing styles. So this is a great time to teach them how to make money by selling some of their old stuff, which has the added benefit of tidying up your house.
The first step is to teach them how to rate their items so they can sell them and where to sell them. When I think about selling something, I usually look in a few places first to see what the comparisons are. The two biggest factors are condition and item similarity.
I ask the children to find exactly the same items if possible, as this will give them the best current price. If they can find multiple listings on different platforms, I usually ask the kids to take the average offer price and continue. Unless, of course, they want to sell it much faster. In this case, I tell them to rate it at the bottom.
I have the children take photos of the items and research for prices and the best place to list the item. But then I will actually post the item from my account and do all of the interaction with potential buyers. If someone wants to negotiate the price, I’ll talk to the kids about it to get their thoughts instead of just doing it myself. Because this is just another opportunity for a teachable moment, even if it can take longer.
And as an added bonus, when the kids sell their old things, I can also teach them to invest in their future at the same time. I usually want the children to save part of the money they make from selling their old things. So this is a great time to let them search High interest savings accounts put their money in. Whatever they put in these accounts, they can’t touch each other so they can watch it grow.
Set up a Roth IRA and teach them how to choose their own investments
One of the best things I’ve done for my kids financially is to teach them about Roth IRAs and choose their own investments. If you are Self-employedJust as I am and can legally pay your kids to work for you, this can be a good time for a long-term financial lesson.
But even if you are not, you can give your children money to put in a Roth IRA. The limitation with giving money to your children is that they have to earn income all year round to cover the contribution. So if you pay your middle school child to mow the lawn and weed the yard twice a month for $ 50 per inhabitant, you can give him $ 1,200 for a Roth IRA. Just make sure everything is clearly documented as the IRS can be quite picky.
However, once you’ve figured out how to best help your child fund his Roth IRA, the bigger lesson comes. Three of my children work for one of my companies and I pay them monthly. Every month I discuss with each of them how much they get paid and what minimum has to flow into the Roth IRA.
One of my children is a natural saver, so she puts the whole paycheck in her red. But the other two prefer to spend everything they have, like water. I have to help them regulate a bit more and just give them the option to keep $ 10-20 for expenses.
No matter what you want to keep when the rest of the money is deposited into your Roth IRA accounts, you have to tell me where to put it. When the custody accounts were set up, I explained what a listed company is and let them search for companies in which they were interested.
Then I went through the list of options with them to help them decide where to actually invest their funds. The best way to do this is to look up any business and look at the 30 days, a year, and five years performance with the kids. They then make the decision whether or not to invest based on their long-term goals.
And every month we go through their portfolio to see what their stocks and mutual funds are doing for them. This lesson has been one of my favorite lessons so far because it teaches them more complex financial terms. And it also created a friendly family competition between the kids to see who made better financial decisions.
Teaching teenagers about finance can be a little more difficult, especially if you haven’t started yet.
But if so, this is the time for even more complex finance lessons. They have only a few years left until they become self-supporting adults. So it’s time to teach them the really important things (including the cost of car insurance) that can help them avoid debt.
Teach them how much their car costs each year
If you live in a place where it is extremely difficult to get around without a car, this is an important lesson for your teenagers. While driving around a car can be a lot of fun and get you from point A to point B, it also costs money to operate it.
Most often, teenagers just think about how much gasoline costs to keep the car running. But in reality it is Cost of owning a car takes many other things into account, such as:
- Car insurance.
- Parking fees.
- Property taxes.
- Vehicle type (sedan, hybrid, SUV, truck, electric, etc.).
- Auto payment / loan (if available). If so, I recommend our car loan calculator.
For this reason, every car and every situation will be completely different. This is the time to go over each of these points with your teenager regarding their specific car, to help them determine the actual annual cost of owning their car using our car affordability calculator. Once they figure that out, that average amount has to be allocated to their annual auto / auto budget.
And if you really want to be proactive, you can now have them set up a high-yield savings account specifically for these costs. This way, they can start saving up for these car costs before they ever leave and have a pillow to help them.
Let them do your budget for the month
Speaking of budget: the automotive budget is a good starting point so that you can create your monthly budget. At first glance, this may seem daunting to them. However, this is an important lesson to learn.
If you don’t have one yet Budget table, then MU30 has a fantastic download to get your teen up and running.
In both cases, some of the most common categories that must be included in the budget:
- Car costs.
- Mortgage or rent.
Of course, if your teenager helps you with this particular financial item, it means you have to be 100% transparent with it. Some of us may have a hard time, but it is an extremely important lesson that you can teach your children. And you just never know what they could come up with. In fact, they may have a more creative budget than they currently do, and may save you more money in the end!
Let them create a budget for higher education
Find out how much their College education could cost you They are another fantastic way to get your teen excited about finance. This plan is similar to the one that helps you with your monthly budget. Aside from the fact that they will change the household categories to things like:
- Rooms and meals.
- Health insurance.
Once your teen has saved all of this information, the next step is to figure out how much they could possibly earn each year to offset college costs. Once this is established, they have a clearer idea of where the discrepancy between annual expenditure and income could be.
Teach them how side jobs can diversify their income streams
Another of my favorite things to do with my children is diversifying income streams. In fact, my income diversification is the way I’ve lived my life since I was 16. And it worked very well for me when the work environment changed. Whether we like it or not, nothing stays the same forever. It is therefore important to teach your children about diversification at a younger age.
There are so many things children can do these days to diversify, but the options below are some of my favorites.
VIPKid is a virtual classroom platform used in China to teach English to children. And for those of us who speak English as a mother tongue, this can be a great way to earn a part-time income in your free time.
Teachers on this platform earn between $ 15 and $ 22 an hour, with an average of $ 20 an hour. I realize that this doesn’t sound like a lot of money straight away, but it can make for a great part-time gig if you do it often enough.
While your teen can’t really become one VIPKid teacher At this stage of the game, you can see how you teach on the platform. In this way, they are ready to include this in their income stream arsenal once they have a bachelor’s degree.
Delivery services have become big business in recent years. But they are even bigger in today’s economy if everything goes well. So this is a great time for your teen or you to take advantage of one of the many delivery services needed. Some of these great services include:
Not all of these services may be available in your area. However, this is a good time to participate in at least one of the delivery services. Your teenager can also take care of his schedule, which makes this kind of diversification a breeze.
Pet sitting is something I’ve been doing since I was young. However, it has become much easier to find broader customers with new platforms that have emerged in recent years.
When I was a teenager, my pet owners all came from my parents ‘neighborhood or from my friends’ parents. But in the past couple of years, after my daughter’s suggestion, I’ve been looking at sitting pets again, and it’s a completely different world now.
There are two great platforms you can go through (or both if you want):
I originally applied for both, but chose Rover instead because the platforms meet different requirements.
Rover is more focused on overnight boarding requests, along with dog daycare and some animal visits.
While Wag is more geared towards dog walking and drop-ins. Since I work from home and have five children, we prefer to mount dogs or have them for a dog day care center. So Rover made more sense for our situation.
And I can’t tell you how much we all love diversifying our income streams in this way. Not only can we hang out with lots of great dogs, we can also be paid to cuddle with them!
You must be at least 18 years old to work for either service. But if your teenagers can get you on board, they can help you and you can pay them through your business. This is exactly how my children earn a paycheck from me to finance their Roth IRA.
Survey sites are another great way to get your teen to diversify their income streams. These websites are easy to connect and most have a lot of surveys that you can do regularly.
Some of the highest paid and easiest to navigate survey pages are:
All of these websites are slightly different and have slightly different payout structures. So it’s best to try to reach as many as possible and find out which ones are best for your teen. Then you can narrow down on which you focus your time and energy from that point on to make the most money with this sideline.
Overall, there are so many ways you can get your kids excited about finance when they’re stuck with you at home now. In fact, this is the best time to do so, as they have less of their regular distractions.
It really doesn’t matter if you have a young child or a teenager – there are great ways to teach them about finance and keep teaching them in old age. T.He hopes this will ignite her fire into adulthood if she’s excited about finance now.