What does your list of resolutions for 2016 look like? Something like this?
Sorry, you’re on your own for the first two. But I can help you nail number three.
How? I’ve been collecting tips throughout the year from the best family finance articles on the Internet. I’ve listed my favorite ones below. Just circle a few tips that make the most sense for your kids, and pop them on your list.
We all want to raise kids who are grounded, generous, and smart about money, right?
Yep. Just show us the manual!
Well, as of last week, you can pick up an excellent one courtesy of Ron Lieber, the personal finance columnist for The New York Times. It’s called The Opposite of Spoiled.
Warning, nerd alert on this first one!
I love this article about a dad who pays his son’s allowance in Bitcoin using a service called ChangeTip. Check out the post Why I Pay My 7th Grader’s Allowance in Bitcoin. Gil explains how he does it and why. It’s as much about father-son bonding and education as it is about money.
I dig the approach, but you have to be willing to jump into the brave new world of Bitcoin which is still fairly daunting and somewhat sketchy in my opinion. Here’s a good place to start if you’d like to see what’s involved: Getting Started with Bitcoin from the Bitcoin Foundation.
Here are the rest of my favorite family finance picks from the month of December.
Are you stuffing your child’s savings in a bank account because you’re afraid of the stock market? If so, what do you suppose the annual return after inflation will be? Minimal. In fact, it may be negative.
Whether you’re a millennial or not, you might want to check out this excellent article in the Wall Street Journal: The Market Is Your Friend. Really: A Millennial’s Advice to Peers. First, it explains why the fear that millennials (and perhaps you) have about investing in the stock market is quite understandable. Second, it explains why they (and perhaps you) really need to get over it! The bottom line: 6.8%. That’s the average annual return after inflation that the stock market has earned since 1871, and that’s in the face of 29 recessions, 1 Great Depression, 2 world wars, and plenty more disasters. If you’ve got time on your side, you’re going to be hard-pressed to find a smarter long term investing strategy than a low cost US stock market index fund. And, fortunately, time is one thing your kids have in spades!
What if your net worth was pasted on your forehead for all to see? Would it change the way you spend? Would you still see people buying cars costing more than what they have socked away for retirement?
For an interesting reflection on the taboo subject of money and how the outward appearances of wealth don’t always match reality, read Carl Richards’ article in the New York Times: Living Your True Wealth. The article should spur some excellent discussions with your kids. I love Carl’s napkin graphic too featuring one of my all-time favorite phrases: “Big hat; no cattle.”
Here are my other favorite family finance articles for the month of October:
We’ve been scouring the web for good family finance articles all month and posting them on the FamZoo Facebook page.
Here are the very best ones from the month of September:
If you hang out on our Facebook page, you already know we review boat loads of articles on family finance each month so you can concentrate on just reading the good ones! And if you just want to peruse the very best ones, you’ll always find them here.
The top family finance picks for August?
“Life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”
That’s a definition of the American Dream supplied by James Truslow Adams in 1931. The American Dream is the common thread running through this week’s family finance picks. Read on to delve into these deep family finance questions:
One of the easiest and most effective ways to give your child some much needed financial perspective is to have them make a savings goal. That common theme runs through each of this week’s family finance picks:
“By sowing frugality we reap liberty, a golden harvest.”
—Agesilaus
Each of this week’s family finance picks contributes thoughtful insights on how we can start sowing frugal habits in our kids so they can reap the benefits in adulthood.
Interesting new brain science behind charitable giving, inflationary tooth fairy payout statistics from VISA, and a Mom’s clever ideas for prepaid card usage topped the list of interesting family finance articles last week. Here’s the roundup with links for deeper reading:
Survival of the fittest! Darwins famous findings taught us that humans are hard-wired to out-compete others for the best mates and the most resources to perpetuate their genes to future generations. So why do we bother to help others? Is it just a Darwinian extension to help ensure survival of close kin or the broader tribe?
It appears to be more than that. According to new brain studies, it looks like we’re hard-wired not just for survival, but for altruism too. The bottom line: altruistic decisions give us a “buzz”. More scientifically speaking, fMRI data shows that the decision to donate to charity lights up the nucleus accumbens area of the brain which contains neurons that release the pleasure chemical dopamine.
Finally, a “drug” we don’t have to worry about our kids getting hooked on: charitable giving.
Related FamZoo Activity: Make a charitable giving goal.
Discuss on FaceBook.
This week, my favorite family finance picks are:
That said, many folks who purchase high end luxury items are also extremely generous and hard working, so Sam’s point about taking care not to pre-judge is a great topic too.
Discuss on FaceBook.
How about teaching your kids good money habits?
If your kids are old enough to ask for purchases at the check-out stand, they’re old enough to start practicing managing their own money. In fact, John Farrell of Rider University points out in the first article below:
Money management is a set of life skills that needs to be taught throughout our lives, from 5 to 105.
In other words, start early and don’t stop!
Ideally, schools should play an important role in financial education, but I really like what John has to say regarding the role of parents:
Parents actually have the primary responsibility for teaching these skills. What better place to teach about money than in the “economic unit” of a family. I believe parents are in the best position to educate their children.
In fact, this sounds perfectly in line with what we’ve stated on FamZoo’s “Our Philosophy” page for many years, which I’ll repeat here:
We believe a parent is a child’s best mentor. As a parent, you are in the best position to teach your children many of life’s most important skills. Nobody knows your kids and your family values like you do. You want the best for your children, and they naturally look to you for structure and guidance. We’re here to help you be the best mentor you can be.
Finally, I like how John emphasizes teaching personal finance skills in a “practical, hands-on manner:”
As educators, we also know that in-class learning can only take our financial education so far; learning by doing is a key element of anyone’s financial education. This is where parents come in as teachers, coaches and role models.
By all means, don’t make the mistake that Mary’s parents made in the second article below. Since they considered discussions about money to be "vulgar," they never discussed money matters with Mary as a child. Furthermore, they never even allowed her to handle money. Not surprisingly, Mary had money issues as a young adult.
So, three key things to keep in mind when it comes to your kids financial education:
Need help getting started? Check out the 12 mom money rules in the second article. You might also check out my 3 simple tips here.
To help implement your money rules, you might resolve to set up online bank accounts for your kids like New York Times writer Ann Carrns describes in the third article. I applaud Ann’s effort, but to make things more hands-on and engaging for the kids, I recommend a virtual family bank approach instead, or perhaps a teen prepaid card for the older kids.
All that said, don’t spend too much time agonizing over which precise rules and tools are best. The most important thing is to resolve to start teaching your kids good money habits through hands-on practice in 2013. Then, follow through with your resolution going forward — fine tuning as necessary along the way.
Your kids will thank you...someday.
I love what John Farrell, Assistant Dean at Rider University, has to say in this interview about the role of parents and schools in teaching kids about personal finance!
Discuss on FaceBook.Three moms share their top money rules for their kids. It’s very interesting to see how the diverse childhood experiences influenced each of the Mom Money Rules. It’s important to see that affluence does not guarantee money savvy behavior; communication and hands-on practice with personal finance from an early age is critical.
The 12 rules are split into 4 buckets: 3 individual sets of rules from each of the moms followed by one set of common recommendations. I don’t actually see any inherent contradiction in any of the 3 individual sets of rules. I’d encourage parents to apply elements of all 12 in their own way.
Discuss on FaceBook.
Ann Carrns writes in the NY Times Bucks blog about her resolution to use ING sub-accounts for tracking allowance for her daughters. I certainly applaud Ann’s resolution to systematically work on good money habits with her daughters each week, introduce them to the concept of online banking, and teach the very important lesson that a balance amount on a screen corresponds to real money.
Whether we like it or not, our kids are entering a world increasingly dominated by electronic transactions. While a good starting point, a piggy bank or sock drawer with wads of cash does not prepare them adequately for that reality. I think sub-accounts are a fantastic banking feature — a great way to take the “envelope budgeting” approach to personal/family finance online. Ann may still wish to check out the “virtual family bank” services that her colleague, Ron Lieber, mentions in his article because they create a much more hands-on experience for the kids. Kids can sign in on their own to see their own funds, make/track savings goals/plans, get weekly statements, review their spending history, make simple budgets, etc. They feel a real sense of ownership and responsibility that way.
Parents can set up more flexible incentives/financial arrangements beyond simple recurring transfers (chore charts, matching, parent-defined savings interest rates, “commission” plans, automatic bill pay for shared expenses like cell phone data plans, loans for big ticket “needs” like computers for school, etc).
A virtual family bank is really identical in concept to what Ann is doing at ING except that the kids are more directly engaged, personal finance learning tools are built-in to the experience, and parents are in complete control of the bank “rules”. Some parents still use an ING sub account in conjunction with our virtual family bank IOU accounts so they can be sure they have the money on hand when their child needs to make a purchase. In the first half of this year, we’ll be introducing an integration of our virtual family bank accounts with prepaid card accounts to make that blended approach even more convenient.
Related FamZoo Activity: Set up a virtual family bank.
Discuss on FaceBook.
We’re constantly scouring the Internet looking for articles related to family finances and teaching kids good personal finance habits. You can visit our ever growing list of family finance bookmarks here. We’re up to 3,068 now!
My main concern: Allowance sites can be an impediment to money talks, rather than a way to facilitate those conversations. Why talk about saving for a goal or the family budget when you can just automate your kid’s weekly allowance?
Hmmm — that’s odd. Our design goal has always been to increase those quality conversations and boost fiscal awareness, while automating away much of the tedium that causes many parents to fall off the chore/allowance wagon after just a few weeks.
Beth is a well known personal finance journalist and a member of the President’s Advisory Council on Financial Capability, so I’m inclined to take her analysis seriously. I wondered whether Beth’s harsh judgement was based on personal experience with an online allowance site, and, if so, which one? However, in re-reading the article, I noticed the following tell-tale lead-in to paragraph three:
Having never used an allowance website with my kids...
Hmmm.
OK, so we’re left wondering how Beth came to the conclusion that online allowance trackers discourage meaningful money talks with kids. Pure gut feeling? I’ve tried reaching out to Beth on numerous occasions including just last week on her Facebook post about the article — offering to walk her through our product personally. So far, no response, but it remains an open invitation.
A comment on Beth’s article captures the perplexing nature of her assessment:
I agree about the importance of financial education for our children and I am grateful that you would write to try and increase the awareness. But I think this article and the article about old school allowance are lacking in helping any become more financially educated. In old school allowance it seems you tell a story of how it became too hard to track so you gave up trying to teach about financial education when it became the most important (teenage years). And then this post you discount the tools that allow it to be easy enough to track. We have been using an online tracker for a while now and it has been the best thing for our children and my house has never been so clean. But I do not use a traditional allowance system, the online system allows me and my children to track their financial decisions.
In the same vein, when I asked FamZoo families on our Facebook page whether FamZoo is an impediment to money talks with kids (see post), here’s the feedback we received:
Anne E: We’re recent adoptees of this online allowance process. Truth is, I was always of the view that allowance is kind of dumb. Our children do chores and help out around the house because that’s the right thing to do. We started out with Famzoo so they could learn budgeting and responsibilty with their money. They have tasks or chores equal in value to their weekly allowance. If they don’t do their tasks, they get that amount deducted from their allowance. Guess what this has done? It has them working harder! They now associate their work with money. For our family, it has been helpful and far from an impediment.
Andrew P: That is a shockingly poor article — firstly, she openly admits to not having used any of the sites, then quickly progresses to discussing the pros and cons — on what basis? Secondly, she freely admits they are a ‘cash’ using family. That is admirable, and maybe follows conventional wisdom, but we are increasingly moving towards a cash-free society. It is far better that our kids get used to dealing with money as a ‘cyber’ currency now than have them struggling with the discipline required in 10 yrs time. As far as meaningful discussions with our kids, I fail to see how FamZoo is an impediment. Our family has had many conversations about saving vs spending, benefits of compound interest over time, not rushing into purchase decisions, etc. FamZoo helps in this regard as the kids have their own login and can see their savings grow. So Beth — you can keep your cash methods — my family are sticking with FamZoo.
Shawna C: I just opened a trial FamZoo account this week and explained a bit about the idea of savings goals and compound interest to my 6-year-old tonight. I also set up a chore list for each kid, but it’s not coupled to the allowance so they can’t say, “I don’t need money this week so I’m not going to bother with my chores.” So far, so good with Famzoo!
Denise W: Well, she has not seen my FamZoo account then for sure. FamZoo and watching your money is talked about almost daily in my household.
Melissa K: I have found FamZoo to be a huge asset when it comes to teaching my 11 and 13 year old boys about money! We incorporate a lot of Dave Ramsey’s philosophies as well. We are not creating an “entitlement” culture, we are creating a family that understands that attention to responsibilities and a strong work ethic has positive results. The banking aspect of this site has resulted in a greater desire to save and a true sense of financial empowerment.
Now, these are our fans, so they’re admittedly biased. That said, their responses are based on actual experiences.
I welcome dissenting opinions from those who have had different experiences with online allowance and chore tracking sites — particularly FamZoo. Honest, thoughtful criticism helps us refine our offering and deliver a better service, so don’t hesitate to contact us.
In any case, if you scratch beneath the surface, you’ll find that we offer far more than a “glorified gold star chart.” More importantly, by putting the tedium of your kid’s money management on autopilot, we keep the meaningful money talks front and center week in and week out.
The article that sparked the commentary above.
Discuss on FaceBook.
The recent public radio Marketplace segment in which Suzanne Skyvara describes how she teaches her kids good money habits with FamZoo, and Beth Kobkliner expresses her skepticism.
An earlier article by Beth that covers her family’s stuggles with allowance (“With three kids, my husband and I still haven’t mastered the art of giving them allowance in a timely fashion.”)
Last week, Dan Kadlec invited me to chime in on the “allowance debate” for his article in TIME Business & Money:Kids and Allowance: The Debate that Divides Us. I was honored to be included alongside some of the most prominent names in personal finance (Suze Orman, Dave Ramsey, Jean Chatzky, Janet Bodnar), and I was relieved to be grouped in the “thoughtful” corner (I can just see my kids rolling their eyes now).
Here’s my stance on the allowance debate — most of which Dan was nice enough to include in the article verbatim:
I find the allowance debate to be a diversion. To me, the far more crucial thing is practice — early and often. I think it’s critical for parents to make sure their kids get regular hands-on experience making real spending, saving, and giving decisions with a modest, constrained supply of their own income. I don’t think the specific source of that income (unconditional allowance, chores, outside jobs, or a hybrid thereof) is hugely important — as long as it’s thoughtful, consistent, clearly communicated, and in line with the family’s values.
Furthermore, the appropriate source and amount of that income varies with age. As kids mature, they can manage spending for more than just little occasional “wants” and start tackling budgeting and expense tracking for specific needs — like clothing. Over time, they can also be expected to kick in more and more income on their own from outside work.
My bottom-line advice to parents: don’t let agonizing over the allowance vs. chores debate get in the way of getting your kids started with hands-on money practice — pick an approach, get started, and tweak it over time.
Beyond the compliment of being included, I was particularly pleased to see Dan cast a critical eye on the Mandell research that purportedly shows an inverse relationship between receiving an allowance and developing financial aptitude. The less discerning journalists tend to just run with a link-bait headline like “Allowance Does More Harm Than Good” and then couple it with a fluff piece sans any meaningful analysis. A more accurate headline that more closely matched the findings would really read something like: “Thoughtlessly forking over an allowance with no discussion or guidance probably won’t teach your kid good money habits.” No, duh.
My feeling: Allowance isn’t the problem, but parents might be. Allowance is just one simple tool (among many) that parents have at their disposal. If parents are thoughtfully delivering a modest allowance as a way to give their kids regular practice managing a constrained financial resource (also know as operating within a budget), I can’t fathom how that would inhibit the development of their financial aptitude. If the “research” shows otherwise, I’m inclined to think there are other factors at play that are skewing the results (see section 2 of this post for more thoughts on such studies).
Dan Kadlec covers all the “expert” (present company excluded!) angles on the ever polarizing allowance-for-kids debate: no allowance ever vs. pay for chores only vs. allowance as a budgeting tool.
Discuss on FaceBook.
Typically, when parents hear “allowance”, parents think “spending”.
In the worst case, allowances fuel more spending. Thoughtless parents unconditionally shower bloated sums on their entitled kids who rush out to satisfy their “wants” on the latest consumer-driven fads. Instant gratification. Profligate spending. Ugh.
In the best case, allowances constrain spending. Modest sums are saved week after week by patient kids who deliberate over their eventual purchases, weighing the pros and cons of each. Delayed gratification. Disciplined spending. Good stuff!
But there’s another word I wish allowance would more readily evoke: “giving”. Allowance can be a great tool for introducing your kids to philanthropy, and cementing a lifelong habit of charitable giving. Here’s how you can get started today:
Pick a giving goal. Sit down with your child and pick a charitable giving goal that matches her interests and means. Need some ideas?
Want more ideas? Check out pick #1 below.
Make a fund-raising plan. Help your child work out a gameplan to raise the funds for the donation. Here are a few ideas to mix ’n match: set aside a portion of allowance, tackle some odd jobs, hold a fund-raising event, or convince mom or dad to kick in some matching funds.
Track progress. Review progress each week with your child. Fine tune the plan along the way if things are getting off track.
Create a memorable giving moment. When your child donates her own hard-earned money to a cause, it invariably creates a strong sense of fulfillment and pride. It’s a powerful moment. Reinforce it. See picks #2 and #3 below for two recent examples of memorable giving stories involving young philanthropists.
There are lots of neat family philanthropy ideas in this article that came out as part of the #GivingTuesday campaign this year. Here’s what that campaign is all about:
#GivingTuesday™ is a campaign to create a national day of giving at the start of the annual holiday season. It celebrates and encourages charitable activities that support nonprofit organizations.
Related FamZoo Activity: Make a family charitable checklist for 2013.
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I love this story about a 4th grade girl’s generosity with her allowance.
Discuss on FaceBook.A wonderful Thanksgiving story from Neale Godfrey showing how an allowance empowers a child to not only spend, but give.
Related FamZoo Activity: Split your child’s allowance as suggested by Neale.
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When used properly, allowance can be a great tool for helping kids make a habit out of both disciplined spending and thoughtful giving.
Good luck and happy giving!
We’re constantly scouring the Internet looking for articles related to family finances and teaching kids good personal finance habits. You can visit our ever growing list of family finance bookmarks here. We’re up to 3,024 now!
Those classic roadblocks can get in the way of teaching your kids about money, too: strong differences of opinion between spouses, extreme controls on your child’s spending, a fixation on finding the perfect all-encompassing system.
How do you move beyond the roadblocks? Find some middle ground.
This week, each of my three picks illustrate the middle ground when it comes to some classic kids and money debates.
Maybe your spouse feels strongly that an allowance is a terrible idea — a work ethic crushing entitlement! Maybe you, on the other hand, view allowance as a simple, effective tool for practicing basic money management habits like saving and resisting impulse purchases. Instead, your spouse wants to pay your child a “commission” for doing chores. How else will your child learn to appreciate that money is earned through hard work? But, you worry that paying for chores sends the wrong message about pulling your own weight within the family. After all, nobody pays you to make the bed or fold the laundry! Do you want your child demanding payment for every little request for help? Nope.
You and your spouse are at an impasse. You can’t agree on a system, so you continue to be ad hoc or even inconsistent with your child when it comes to money. With no reliable, predictable income source, your child has no opportunity to practice good money habits.
What’s the middle ground in this case? Perhaps Jack Otter, the Executive Editor of CBS MoneyWatch and author of the book Worth It... Not Worth It?, has the answer for you. In this article and short video, he handles a rapid fire pop quiz on 10 common money questions. Among them is the classic: “Kids, allowance or pay for chores?” His answer is short and sweet: a modest allowance coupled with pay for “big” chores that are outside the normal, expected household duties.
Related FamZoo Activity: Set up an allowance and a (big) chore chart.
Discuss on FaceBook.
You’re disgusted with all the focus on consumption within our society. The thought of kids running around with the latest, greatest shiny techno-gadgets or trendy fashion items turns your stomach. And now your child announces she wants to save her money to buy that bleeding edge, “insanely great” tablet computer. Absolutely not! You’ll decide what’s appropriate for your child to purchase. Everything beyond that — money from birthday checks, odd jobs, you name it — goes right into to her savings account. No questions asked. After all, you know best from your own experience.
The problem is: by withholding all financial decision making responsibilities from your child, you’re robbing her of the most effective teacher of all: personal experience. It’s awfully hard to learn a skill without some of your own trial and error.
What’s a good middle ground solution here? Relinquish some financial decision making responsibility to your child, but couple it with some smart spending guidelines to ensure an appropriate level of frugality. That tablet for example? Fine — as long she purchases a gently used one. As Gary Forman, founder of The Dollar Stretcher, advises in tip #1 of this excellent article: teach your kids that “hand-me-downs” are acceptable. That will lead to smart money decisions later as a young adult, like buying used cars instead of new ones. Read the rest of Gary’s list here.
Related FamZoo Activity: Agree on a savings goal with your child.
Discuss on FaceBook.
Budgeting is the cornerstone of personal finance. So you’re determined to teach your child that critical money management skill. Many experts recommend putting your children in charge of their own spending and tracking it relative to a budget. In a perfect world, that budget wouldn’t just cover pocket money for modest “wants,” but real world “needs” too: school lunches, birthday presents for friends, mobile phone charges, clothing, entertainment, you name it. And if your child mismanaged her budget? Tough!
In this article, Beth Kobliner describes why her “tough love” allowance/budget failed for her tween. She abandoned it, and went back to a nominal allowance to cover just miscellaneous “wants.”
That’s too bad, because I think there’s a middle ground learning opportunity in the real world “needs” budgeting department. There’s an approach that keeps things simple while retaining a little of the very effective “tough love” learning element. Just focus on a single, well-defined area of spending that your child truly cares about — clothing is a classic example. Work out a budget together focused on just that area of spending, allocate an allowance that matches the budget, and have your child manage spending within the budget. It’s far more manageable than an all-encompassing budget, and it teaches the basics of the skill effectively.
Related FamZoo Activity: Make and manage a clothing budget.
Discuss on FaceBook.
We’re constantly scouring the Internet looking for articles related to family finances and teaching kids good personal finance habits. You can visit our ever growing list of family finance bookmarks here. We’re up to 2,978 now!
Practice, practice, practice. Everyone agrees that kids need lots of practice to master a skill, right? Whether its sports, academics, music, you name it.
So, where do you start?
To practice, kids need some real money of their own. Don’t get too bogged down in classic allowance vs. paid chores debates when it comes to determining your child’s source of income. Just pick an income source and amount that makes sense for your family’s situation. Then, give your child the freedom and responsibility to make regular spending, saving, and giving decisions with that money — within some minimal set of basic boundaries that you establish.
Through repetitive trial and error along with your guidance, your kids will develop the skill of making wise money decisions.
Practice makes perfect — or, at least proficient.
With the “real world practice” theme in mind, here are the family finance picks of the week:
A bit of a “party pooper” post from Investopedia about Monopoly, but a good reminder that the best games are designed first and foremost to entertain. To really learn something, like personal finance, nothing rivals real experience. It’s all about (real) practice.
Discuss on FaceBook.
FamZoo Mom, Suzanne Skyvara, was back on public radio again last Friday in this longer four and a half minute interview segment — an expansion of the original shorter broadcast here. Suzanne describes how FamZoo helps her kids practice making financial decisions like the trade-off between spending extra money on a soda now versus saving it toward a video game purchase later. The experiential learning includes living with the consequences of truly bad decisions, too: like losing $10 to your brother over a spontaneous bet about the name of a video game. Oops.
Related FamZoo Activity: Review your child’s financial decisions with them each month.
Discuss on FaceBook.
Ryan pens a solid, and pretty typical, article on allowance basics. He wades into some of the classic debates such as whether or not to pay for typical household chores. The gold of the article is all in the “Bottom Line” section at the end. Ryan reinforces the notion that the true value of an allowance is creating an environment in which kids can practice making financial decisions. That’s nicely captured in the classic allowance-amount axiom that Ryan highlights:
A child’s allowance should be enough to allow them to buy something small right now or save for something big later on.
Related FamZoo Activity: Help your child track progress on a savings goal.
Discuss on FaceBook.
We’re constantly scouring the Internet looking for articles related to family finances and teaching kids good personal finance habits. You can visit our ever growing list of family finance bookmarks here. We’re up to 2,992 now!
Keepin’ it real with this week’s three picks:
LearnVest interviews Ron Lieber who makes several excellent, practical comments about allowance in this Forbes Woman article. His key points include:
My favorite quote from Ron is: “There is nothing like real dollars in the real world to teach real lessons.” Indeed!
Read the rest of the article here.
Related FamZoo Activity: Set up a modest allowance to constrain your child’s wants.
Discuss on FaceBook.
Here’s a solid article on teaching young kids about money with one caveat. At the end, Gail recommends: ”Get a piggy bank, as it’s a tangible way for little kids to understand money and saving, as opposed to an offsite, virtual account.“
I think a physical piggy bank is a great start, but the sooner kids understand the concepts of online banking and the fact that a balance in a statement or on the screen represents real money, the better. They’re growing up in an increasingly online world and need to understand how to handle all forms of money — from physical to electronic. We’ve found that kids as young as 4 or 5 easily grasp the concept of online banking — kids are pretty darn smart these days, they just need a little explanation and lots of practice making wise money decisions.
Related FamZoo Activity: Set up a virtual family bank.
Discuss on FaceBook.
Gertrud Fremling, a PhD in Economics and a Mom of 5, shares her 7 economic principles for teaching her kids good habits. There are some clever and perhaps controversial ideas here — maybe keeping it too real for the kids? Keep in mind that economics is nicknamed the “dismal science”:
Read more about Gertrud’s 7 rules here.
Related FamZoo Activity: Set up an online chore chart.
Discuss on FaceBook.
We’re constantly scouring the Internet looking for articles related to family finances and teaching kids good personal finance habits. You can visit our ever growing list of family finance bookmarks here. We’re up to 2,981 now!
