This post is the first installment in a series covering life skills that are disappearing as our world technologically advances. As young adults find themselves struggling to learn self-care, social, and financial skills later in life, there is now a demand for such workshops and classes at the college-level. In some instances, technology has also created a need for new life skills that weren’t essential before. In this series, we will explore our top life skills and how your child can master them through fun activities. To follow this series, please subscribe to our blog and follow us on social media.
“Shhh go back to work. I have a list of things I want you to buy me with the money you’re making,” said Kayla Reyes’ daughter after her mother paused a conference call to ask how her day was. Her daughter is five years old.
Understanding the value of money and how to manage it responsibly is an invaluable life skill that can be instilled in children as young as three, and benefits them as they gain independence. Today, many young adults find themselves struggling to balance a checkbook, make large purchases, file their taxes and save for retirement. Children like Reyes’ daughter may not need to prepare for retirement just yet, but understanding how spending and saving money result in different consequences will help them plan accordingly when making financial decisions. Here are some money management activities that make learning fun:
The Lesson: Good Things Come to Those Who Wait
Delayed gratification teaches children to focus on long-term goals rather than short-term gain, and has been proven to have lasting benefits. The famous Stanford marshmallow experiment, which involved 40 years of research, found that the children who waited longer for a larger reward were generally more successful into adulthood. This can be taught without using money; Try making a pie from scratch and buying a frozen one. Although the homemade pie takes longer to make, there’s no doubt it tastes better than a frozen pre-made one!
Waiting for something you really want can also be demonstrated by diving money into three jars. Decorate and label the jars “Saving,” “Spending” and “Sharing.” When your child receives money, they can divide it among the jars as they choose. Guide them by explaining that the “Spending” jar should be used for fun purchases like treats or stickers. The “Saving” jar can be used for higher value items like exciting toys or books. The “Sharing” jar can be used to give someone something they need.
The Lesson: Keep Track
While designating money into categories for appropriate spending is useful, it is also wise to keep track of money. Creating a colorful chart on a wall, in a notebook or on a computer will serve as a useful visual to manage money. Setting obtainable and desirable goals on the chart can also make this activity exciting!
The Lesson: Make Good Choices
Understanding opportunity cost is an important mentally to help children make thoughtful decisions. There is a consequence for every action, and spending money on ‘X,’ may mean that you will not be able to purchase ‘Y.’ By talking aloud through your own financial choices when making a purchase, your child will begin to understand what important points should be considered. Try giving your child a few dollars in a grocery store and have them make choices about what to purchase. They’ll have fun and feel proud making some of the decisions that impact dinner!
Along the lines of delayed gratification and making good choices, it is important to teach older children about credit card caution. Earning good credit is important, but it must also be balanced with not spending money you don’t have.
The Lesson: Money Can Help Others
Using the “Saving” jar, this money can go toward a treat or toy for the family pet, or gift for a family member or friend. Saving enough money for a family ice cream party is also something everyone can enjoy! This teaches your child that money can help others and sharing feels good!
Creating fun ways to learn the value of waiting before buying, demonstrating wise purchasing choices, tracking finances and donating money will help your child find value in money management. In addition, early guidance will enable them to grow into empowered adults when it comes to opening new bank accounts, maintaining great credit and making large purchases- like their first car or home. Because of this, financial management is a crucial life skill that your child will thank you for teaching them in the future. Stay tuned for our next installment of our life skills series!