Guest Column
Matt Lueder
Fun activities help kids get their money in order
Teaching children fiscal responsibility should start at home, at a young age
Teaching kids about money sounds fairly easy and straightforward at the outset. Get a piggy bank, start an allowance and put earned coins in the bank. For some parents, that's the extent of the hands-on money education -- schools can take it from there. But in reality, helping children develop true financial skills requires parents to build a strong foundation that includes how to successfully manage their money.
While this sounds like a lofty idea for young kids, there are creative yet simple ways parents can use to help their children understand the important choices to be made with money.
To begin, parents should discuss the basic ideas of spending, saving, and yes, even investing and donating. Knowing that these choices exist is one of the first steps in learning how to balance the ways we use money -- a difficult task for kids and parents.
Making Money Lessons a Fun Activity for Kids
To get you and your kids on track, consider these fun and practical ways to illustrate the basics of money management in your day-to-day activities:
- When you save, money grows. This is an important first message to help your child understand. After dropping coins into the bank week after week, visually point out how at the end of four weeks and four "deposits," the amount within the bank grows.
- When you save, coins grow into dollars. After collecting money for a month or so, empty the bank and cash in four weeks of coins for dollar bills. Put the paper dollars back in the bank, along with the extra change. Do this periodically every few weeks or months.
- Savings plus interest equals even more money. You can explain how interest works by comparing interest to a reward or "thank you" that the bank pays savers for holding their money in the bank. You can illustrate the idea by adding a nickel to each dollar your child saves. Count out 10 one-dollar bills, and then place 10 nickels on the table. Help your child count the interest. Your child will discover that he or she has made 50 cents simply by keeping money in "savings."
- Begin a matching 401(kids) program. To reinforce saving and create more incentive, you can pledge to "match" any money the child saves. Sit down with your child every two weeks and count the total saved so your child can see matching in action.
- Help your child plan. Work together with your child to decide what portion of savings should go to short-term and long-term savings goals. Let them take ownership of their plan.
- Keep your eyes on the goals. Your child could draw or find a picture that illustrates a short-term goal, like a book or a toy, as well as goals that are far away, like a video game system or a computer. Pictures help kids visualize their goals.
- Start a four bank system. Consider taking the learning experience to the next level by expanding to a four bank model, which includes: A spending bank for money to be used soon. A saving bank for money to be used later. An investing bank for money that will grow on its own. A bank for donating money to help others.
Setting up this system is as easy as finding four plastic containers and labeling them Save, Spend, Give and Grow. Again, your child can decorate them with pictures and drawings. By turning the project into a fun activity, you make the message both enjoyable and memorable.
Developing good financial habits in your youngsters is one of the greatest gifts you can give them. As an added benefit, in teaching kids about managing money, parents find themselves reminded of the basic fundamentals they themselves often overlook or don't follow. Lessons instilled in your kids often can help you get back to the basics with your own finances.
A great tool to keep you and your family stay on track is the newly updated www.themint.org Web site, which provides tips, activities and insights for kids and parents, and even lesson plans for teachers, to instill the importance of making smart choices with your dollars.
Lessons in money management need not be hard or complex. By keeping it simple and in the context of everyday activities, your kids can reap the rewards of being money smart -- a reward that will pay dividends for years to come.
Matt Lueder, CLU, ChFC, is the managing director of The Lueder Financial Group of Northwestern Mutual Financial Network with offices in Rockford and Janesville, Wis. Call 815-398-6636 or e-mail matthew.lueder@nmfn.com.
The views expressed are those of Lueder's and do not necessarily reflect those of the Rockford Chamber of Commerce.
