Teaching children the value of money –
As Summer is coming, and many teens and kids will be babysitting, running a lemonade stand, or working part-time. When your child begins to earn their own money, it’s important to teach them the skills to make informed financial decisions. Viktoria Jurkovic of the Financial Institutions Division of the Ohio Department of Commerce explains to parents the importance of financial literacy and how to educate your children on these important skills.
Children are constantly watching and listening and they can absorb so much from adults, so it’s important to be open and honest in conversations about money.
“The more you think out loud and have these conversations with your kids, the more they’ll appreciate it,” Jurkovic says. “One of the biggest things I hear from adults is, ‘My parents never talked about money.’ Financial literacy is about understanding where the money comes from, how much you have, and where you’re going to spend it effectively. It’s really the big picture.
“Financial literacy is a comprehensive way to ensure individuals are able to make good financial decisions that will benefit their financial health,” she adds. “It’s a process of understanding the dynamics and value of money, and then being able to make the best decisions based on your personal positioning.”
Children should learn financial literacy skills from around the age of 3, from how to budget and plan for the future, to decision-making and managing more wisely. resources.
“When we start to infiltrate the ways we teach kids at a younger age, they start to appreciate and value money a little bit better,” Jurkovic says. “They are also at an age where they start to model the behavior around them. So when you play store with your preschooler and explain that you have to buy the vegetable, that’s where the value for money is displayed.
Children will naturally learn financial literacy skills through modeled behavior. Children can learn some of these skills at school, but having these conversations at home is invaluable.
For example, she says if you’re planning a birthday party for your child and shopping, talk about the process from what you think. Speak out loud so they can understand your decision-making process and can benefit from hearing the reasoning behind what you do with your money, she says.
Teaching teens to save
For teens and children who will be earning a salary, it’s important to help them be responsible for their income and be open and honest about financial decision-making skills.
“Maybe set up some sort of kid’s savings account,” Jurkovic says. “For teenagers who will be working part-time, explain to them that the check they will take home may be smaller than expected due to taxes.”
Jurkovic says it’s important to be transparent and have open conversations. Start with a simple budget and save for one goal, like a vacation with friends or an expensive gaming system. Children can then begin to set aside some of what they earn for long-term savings, etc.
“It’s important to have that conversation with them, because we don’t want teenagers to get a job, make money, and then splurge as soon as they get it,” Jurkovic says.
While some children may start earning an income this summer, Jurkovic says it’s up to the family to decide if the child should start paying their phone bill, contributing to grocery bills, etc. Having your child pay a bill can help them become more financially responsible.
“Maybe you can ask your kid to pay $20 per check they get and then give it back later,” Jurkovic says. “At the same time, taking the $20 from them every paycheck still teaches them a lesson. Reassure them that they are contributing and helping.
For young children who want to host a lemonade stand, bake sale, or garage sale, help them come up with a plan. Ask them, “If it’s a bake sale, what’s the cost of your ingredients?” “How are you going to get these ingredients?” ‘Why are you going to sell them?’ ‘When you take advantage of it, what are your plans with the money?’ ‘Why do you feel like you want more money right now?’
“If you’re planning on having a yard sale, maybe sell items on eBay or another platform and ask the child to contribute,” Jurkovic says. “Have them take the pictures, have them write the descriptions, have them do the shopping research, etc. This is a good way to make the child feel responsible for facilitating something.