Summer is the Time to Teach Your Kids Good Money Habits

School is out.

Life skills are in.

And you — Mom or Dad — are the teacher. Uh oh!

Summer is an opportune time to help your youngsters brush up on some essential life skills. You know, those critical capabilities that schools rarely teach, but that kids must master to thrive in the real world.

One of those key life skills is personal finance. Studies show that kids who speak with their parents about financial matters subsequently perform more responsible financial behaviors (more info here). It isn’t all genetic predisposition and brain biology. You, the proactive parent, can make a big difference.

But maybe you aren’t comfortable assuming the role of money mentor. Maybe you feel intimidated by matters of finance. Maybe you just don’t know where to start. No worries. Here are some simple suggestions to get the ball rolling.

First, set up a simple Bank of Mom and/or Dad. That just means that you, the parent run a pseudo bank where each account tracks how much you owe each child. It’s a way to teach your youngsters good money habits in a safe, educational environment with none of the hassle, risk, or unpredictable fees of adult-centric financial products that your youngsters aren’t quite ready for. Need a little more info? Check out these two posts:

• What is a virtual family bank?
• How to set up your virtual family bank.

With your simple family banking system in place, have your child pick a few of the following exercises:

• Earn some extra money from odd jobs.
• Plan and run a lemonade stand.
• Split income between spending, saving, and giving.
• Make a savings plan for a specific goal — a purchase, a donation, or both.
• Make a budget. Got a tween or teen who loves clothing? Try a clothing budget.
• Track expenses.
• Pick up some or all of the expenses your parents have been covering on your behalf. Maybe the data plan for a cell phone or a subscription for an online game.
• Start saving for retirement. Yup, I just said that! If you have a teen who earns some W-2 income from a summer job, you simply must start a “Family 401(k).” It’s brilliant.

That should be enough to get the ball rolling.

Life Skills Summer School is now in session. Good luck!