How to Teach Kids to be Financially Smart in the Digital Age

When adults were growing up, they’d save their money using a piggy bank. Technology now enables kids to save in a different way. I often hear that kids should learn how to write a check, but checks are becoming a thing of the past. Technology has changed the way we save and spend our money, so why not teach kids while they’re young. Parents don’t need to be very tech-savvy to teach these life skills. Understanding how technology can work to our advantage is the key. Check out this infographic, from Philippine based PawnHero, to learn how to make money lessons engaging for kids in the digital era.

How to Teach Your Children to be Financially Smart in the Digital Age

 

Teach Money Skills to Your Middle Schooler This Summer

According to a University of Michigan Study, the average high school senior – who may already be juggling a part-time job in addition to their schoolwork– knows little about saving or proper money management.

In fact, they spend most of what they earn on entertainment and clothing – a pretty bad precedent for young adults heading off to college and the working world. At that age, the money young teens earn in the summer usually comes from parents for household chores like mowing the lawn. Most parents never have a discussion with their kids about how to spend or save that money. Young teens generally don’t think about whether something is a “want” or a “need” — it is typically a want, which would be spent on a game, candy or comics.

If you’re the parent of a 12-14-year-old, that might give you pause – or provide a great opportunity to make a difference. Consider using this summer to stop your child’s bad money habits before they kick in. After all, even though most middle schoolers are shy of legal working age, many begin to work at odd jobs that are starting to put money in their pockets you don’t see.

Consider these steps for an informal summer money curriculum:

Introduce – or reinforce – the “Needs vs. Wants” talk. Maybe your child has a spending goal for the summer – new clothes, maybe a smartphone. It’s all about intelligent money management, even if the goal is somewhat short-term. The “needs vs. wants” talk is all about delayed gratification, the foundational behavior of healthy money management. Link it to smart shopping, encouraging the teen to price-compare purchases, gather coupons and come up with other ways to save in print and online. It’s also not a bad idea to let your child start suggesting thoughtful purchases when grocery shopping for your family. Before he or she can drive, you’ll have a chance to discuss choices and spending while you’re both in the store.

If they’re not working, give them an opportunity to earn. If your middle schooler isn’t picking up a few dollars babysitting or doing chores, come up with an earning opportunity for the summer. It could mean cleaning out the basement or garage or a project around the house that they can handle. It will provide you both with an opportunity to talk about what he or she will do with that extra income. If your child has an entrepreneurial spirit, encourage converting a hobby into a summer business. If they show empathy to help others, suggest they donate their time to help elderly neighbors with simple yard work.

Introduce the ‘bucket” system. It’s hard to know what to save, spend, give or invest without a system. That’s as true for adults as it is for kids. The “50-25-25” rule refers to setting aside 50 percent for everyday, non-discretionary expenses like school lunches or transportation, another 25 percent for savings and the remainder for discretionary purchases, better known as the latest smartphone your young teen says she or he can’t live without. If your middle schooler still doesn’t have a banking relationship, it’s a good time to get started. A custodial checking account will allow you to see how your child is handling money and debit cards are a reliable means of tracking every cent. Also, for savings, you’ll have the opportunity to introduce him or her to price-comparing accounts for features, savings rates and usage fees. Banking relationships should be treated like any smart purchase.

Discuss making a budget. Remind your children that if they want to maximize any part of the 50-25-25 system, they need to learn how to find value and stick to a budget. Most importantly, they need to know how to track their spending so they can stay within a budget. The number of mobile apps that allow people young and old to track their spending grows each year. Whether it’s pen and paper or technology, let the teen find a budgeting solution they like. They’ll be more inclined to use it and stick to a budget.

Consider being more transparent about your finances. There’s no single right answer to the question of how much you should tell your children about your own finances, but keep in mind that they learn by both good and bad examples. It’s important for young teens to know that anyone – even the most important adults in their lives – can make a great financial decision or a mistake. Speak openly about money, with the appropriate safeguards for personal and family privacy. Find a way to make your personal experiences part of the summer money conversation.

Bottom line: Middle schoolers may grumble they don’t have access to the car keys or the cool clothes and technology that the older kids do. But they do have something more valuable – time to learn critical lessons about money. Use this summer to build their financial knowledge for a lifetime.

 

By Nathaniel Sillin for Practical Money Skills

 

5 Steps to Reduce Money Worries

Americans worry constantly about money. Here are five simple steps that will help you reduce your money worries and help you achieve more financial freedom.

1. Budget! A budget is a money plan. Always be aware of your income and expenses, and how much is being saved. Keep track of daily expenses and identify which ones can be cut back. Determine if a second income is needed to save for the future. Emergencies happen so it’s important to have an emergency fund. It’s recommended to have at least 6 months worth of living expenses saved in case of emergency.

2. Reduce! Americans buy so many things that we really don’t need, and most of these things eventually end in the trash. Reducing and reusing and can help you, your community, and the environment by saving money, energy, and natural resources. Consider buying used and saving the difference.

3. Recognize! There will always be people who have more and there will always be people who have less. Don’t fall into debt trying to keep up with the Joneses. Maybe they have the newest SUV but they could also be up at night worrying how they’re going to make the payments. Recognize that needs should be purchased before wants. There are millions of people throughout the world who barely have enough money to survive. Thoroughly enjoy everything you do have. If you have your health, you have great weather. An attitude of gratitude is a smart way to reduce worries.

4. Educate! Financial education is rarely provided in school, despite how important it is to our daily lives. So, it is up to you to educate yourself and be accountable for your financial decisions. There are numerous resources available to help navigate all of life’s financial milestones, but the key is to continuously educate yourself, and seek out advice. Don’t be shy in asking successful individuals for their advice. It’s better to ask a dumb question than to lose money because you were afraid to ask. Take in all the advice you can get and make the best decisions for you. Even the experts learn new things all the time.

5. Start now! It may feel overwhelming to finally take control of your finances but there is no better time than NOW. We can’t expect major changes to happen over night, but aim to take small baby steps in the right direction every day. Start saving NOW, even if it’s not a lot. Set up automatic transfers to your savings accounts. Automatically pay bills online too. Monitor your credit regularly. Set specific goals for saving, spending, investing and income. Once you get in the habit it will be easier to save regularly and you can watch with pride as your savings account grows.

I am confident if you take one or all five of these suggestions, you will reduce your money worries and increase your financial freedom.

What makes someone rich?

I once heard a 5 year-old say “my mom would be rich if she didn’t give all our money to the bank.” It’s funny how innocent misconceptions about money happen to some Americans no matter how old they are. A friend of mine, in her late 20’s, told me her dad says “only rich people can save money”. That got me wondering…what makes someone rich? It is not having any debt? Being able to buy anything you want? What if you already have what you need…does that make you rich? There is no simple answer to this question. If a laborer in a developing world received a $1,000 bonus he would probably be elated. If a hedge fund manager received a $10,000 bonus he would probably be very disappointed. But if the labored had few worries and enjoyed his free time, perhaps he would be “richer” than a hedge fund manager who barely sees his family. It’s all about perspective. Being rich or having a lot of money is often the definition of success. But success to me is not having to worry about money, spending time with loved ones, giving back to the community, and being simply being appreciative of everything you do have.

My Big Dream

I’ve had the pleasure of partnering with Sam X Renick of Dream Big Day to become a Dream Big Day Reader Leader. In this program leaders bring strategic lessons to kindergarten through 3rd grade students through story, song, and activities. The experience starts with the Leader reading the book Sammy’s Big Dream. Students actively listen and have the opportunity to predict the chapter titles throughout the story. Sammy Rabbit, the story’s main character, must work hard and save his money to join his classmates on a field trip to ride the first rollercoaster in space.  At the Leader’s option, the reading can be followed by a discussion, song, and activities on dreams, goals, and great money habits.

Sammy Rabbit brings financial education to life. He is the adorable, infectious, and ethical character who brings and makes the strategic money lessons relatable to students. The story and his big dream are inspiring. The accompanying songs are clever and catchy. They appeal to young children, yet anyone can appreciate and enjoy each topic-specific song. Listen to one of my favorites Anyone Can Be Rich.

I’ve researched countless financial education resources and the It’s a Habit Company (founded by Sam X Renick, creator of Sammy Rabbit and Dream Big Day Experience) is the most exceptional. All content is extremely engaging, fun, and purposeful. Dream Big Day is easy to execute anywhere, by anyone with an interest in teaching children good money and reading habits. I can say from experience it’s very rewarding for both the students and educator. The instructions and activities are straightforward and are simple to adjust or customize to best fit any group of young children.

I can’t thank Sam enough for creating such value in the field of financial education. His visionary work is changing children’s futures and lives, ‘one dime at a time.’ His tireless efforts to support other educators is immensely admirable. The world needs more people like Sam X Renick!

My big dream is for Sammy Rabbit to one day become the next Dora or Elmo. He undoubtedly has the potential. Kids, parents, and educators already love him! When kids learn to work hard, set goals, save their money, and never give up, their opportunities are endless and the future of our economy is much better off. Financial education at a young age is not just a good idea, it’s a necessity, and Dream Big Day makes it’s easy for anyone to pilot test the program and join the cause.