Teaching Kids Financial Literacy in the Moment When You're out of the Picture

Financial literacy works best when it’s delivered in the moment on an as-needed basis.

I love that quote by Ron Lieber from his interview with J.D. Roth.

I’m convinced that good money habits stick as a result of numerous repeated nudges rather than a few epic lectures or various other “one-and-done” type educational efforts. If we can take it one step further and interject those little nudges into our kids’ everyday financial moments, I think we’ll really be on to something when it comes to having a lasting impact on behavior.

Of course, it’s easy to be right there in the financial moment for your kids when they’re young — you’re pretty much always along for the ride. But, what about when your kids get older? Now they’re roaming around with increasing financial autonomy — perhaps even their own credit, debit, or prepaid card — and you’re no longer participating in the financial moment with them. Instead, you’re just dealing with the inevitable downstream financial debacle well after the fact. Queue the epic parental lecture and the teen eyeball roll.

So how do you regain a foothold in the financial moment with your teens? Alerts. Find a payment mechanism for your teens that allows you (and your teen) to receive real-time activity alerts in the form of text messages or emails. That way, you can get back to delivering in-the-moment financial advice on an as-needed basis. Lots of little course corrections along the way beat the heck out of one big disaster recovery operation at the end.

For example, one of my sons is out of state attending his freshman year in college. Check out this alert I received last week from his card:

$82 dollars at a barber shop? He’s in NROTC with a buzz cut — what’s up with that? Sounds like a good financial moment to jump into.

Here’s the gist of our ensuing financial conversation:

Dad: Just saw a FamZoo alert. $82 for a haircut?
Son: Nah, just used their ATM. Needed cash for a Corps project.
Dad: Oh. You’re getting dinged $2 for an ATM fee. I checked MoneyPass, and there’s a free ATM right around the corner.
Son: OK, sounds good.

Why sweat a $2 fee? For one, frugal principle. If you can easily avoid fees, why pay them? Secondly, as Ben Franklin wisely pointed out:

Beware of little expenses; a small leak will sink a great ship.

Nudge, nudge.