Financial literacy thirty years ago consisted of having a lemonade stand, paper route, and a weekly allowance. Students today have required courses in junior high and high school that teach the basics of finances. Elementary teachers also have requirements to teach financial concepts in the classroom. There is no reason to leave all the teaching up to your child’s teacher though. Here are five smart ways you can teach your child the value of money.
1. Take the Lemonade Stand to the Next Level
What kid doesn’t want to run a lemonade stand? But instead of just dumping packaged lemonade mix into a pitcher of lukewarm water and setting it on a card table in your front yard, turn your child into an entrepreneur.
First, consider, together, what are the best items to sell? Hand squeezed lemonade with ice? Pre-packaged candies and cold sodas? Then, think about what up-front costs are involved with each idea, and then price your product with a good profit margin. Offer to “invest” in their business to get them started.
Now, how and where are you going to advertise? Look at examples of great advertisements first, for ideas. The day of the sale, track all sales and inventory. When you are done, calculate your profits and pay back your investments.
There is a lesson plan from the website, Finance in the Classroom, that is based around the book, Lemonade for Sale by Stuart J. Murphy. If you aren’t excited about setting up an entire lemonade stand, you could read this fantastic book, together, and talk about what happens in the story.
2. Weekly Allowance
The concept of a weekly allowance is certainly fairly simple. Work at home equals money. Consider making your child’s allowance based on completion of specific chores. Create a weekly checklist on paper of all their responsibilities and the monetary value each job is worth. As they check off each item, they have earned that amount.
This system works especially well with younger children because it is simple. Completing five chores worth one dollar equals five dollars. With older kids and teens, you can pay by the hour. This will help them prepare for their first job, which will most likely pay hourly. This is a good lesson to help your child understand that it takes work to make money.
3. Go Shopping
Take your kids grocery shopping. Give your child a list of grocery items that you need to purchase. Tell them your grocery budget for this trip and give them CASH. This seems scary, but letting them use actual paper money, will help solidify the value of a dollar, more than if you use a card. While you are shopping, let them add up the cost of each item on a calculator and track their spending.
At the end of the shopping trip, you could offer to let them keep the money, if they are under budget, as a bonus. If you have very small children, you could also replicate this at home with play food and play money.This activity will help your child understand the cost of goods and how much money it really takes to provide for a family.
4. Go to the Bank
There are banking solutions for kids at pretty much every bank and credit union. They often offer incentives for kids who open a new account or get good grades.
You could offer to match every deposit they put in their savings. Or, add to their savings on birthdays, as a good grade incentive, or for special occasions. Helping your child think of a large purchase they would like to save for may help them be more motivated to save. Tech savvy kids will want to know how to log-in online and view their balance. It is exciting and rewarding to see that balance grow.
5. Reflect on Your Financial Understanding
Many adults today may have felt unprepared to navigate the complicated financial world we live in today. Think about what financial lessons you had when you were younger. Maybe you wish you had known how to create a budget. Or, understood more about credit cards. Whatever the lesson you wish you had learned, teach it to your child. There is a quiz by Schwab Moneywise that tests how well you are teaching your kids to be financially fit. You also will get even more ideas for how to integrate financial lessons into everyday moments.
These are only a few ways to teach your child the value of money. There are so many great resources that can help inspire some of your own ideas, as well. Look at financial institutions, school webpages, and online curriculum for many more creative and fun ways to help your child understand the value of a dollar.