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With all eyes on the economy, many people are searching for ways to be more disciplined in their spending. Increased personal financial responsibility is a good thing, of course, and it may be one of the silver linings in these dark economic clouds. As parents focus on their own budgets, it would be a shame to miss the opportunity to pass these lessons on to our kids.
Lauren Covello of Fox Business reports that
The Jump$tart Coalition for Personal Finance Literacy, which aims to improve the financial curriculums of students across the country, releases a national survey every two years that tests the financial comprehension of nearly 7,000 high school seniors. This year’s results showed a decline from the survey prior, with the average student answering only 48.3%--less than half--of the questions correctly.
For those in the industry, that figure underscores the lack of strong financial instruction available for young people.
“It’s like giving every kid a brand-new car on their 16th birthday, but no driver’s license,” said Jason Alderman, director of financial education at Visa. “[There are] a lot of financial wrecks out there.”
Kelly Curtis of Pass the Torch wrote an excellent piece at 5 Minutes For Mom on the topic of teaching your kids, especially teens, to learn budgeting skills. Her suggestions include making them managers of their own money, requiring them to save before spending (limit credit!), discuss marketing strategies, and really hand over the power:
When friends have something your kids really want, use this as a conversation-starter for how they will manage their money. “You really want one of those. How are you going to get it?” If it’s truly a priority item, there are usually a few ways to save – birthday, Christmas, or extra chores to name a few. But when your kids realize simply wanting something won’t make it land in their lap, it may magically become less important.
McKenna of The Mom Crowd makes the common-sense observation that parents cannot teach what they don't do, so incorporating kids into your own budget planning is a good idea, and it gives them a voice:
Be honest with your children about your family budget and explain to them that if you add an expense, you will have to take away another expense. Explain to them that in order for your family to increase their cable channels, you will have to have dial up internet. Allow them to share their thoughts and play a role in your family’s budget.
Certainly, these lessons aren't reserved for older kids. The younger we can teach our kids about responsible budgeting, the better they will be served in the long term. Audrey of Parenting Tips and Ideas presents some very practical suggestions for accomplishing this, including
Does your child enjoy buying lunch at school? Create a system/budget with them, where they are allowed to only buy 2 or 3 days per week. If they don’t buy that often, then make their budget for only 2 or 3 times per month. If you allow treats, allow money for them to buy a cookie or chocolate milk a few times. What this does is causes them to learn to make decisions with the money they have. They have to decide which meals they want to spend their allotment on. They have to decide which treat they want to purchase. They also learn that spending it all up front leaves them nothing the rest of the month.
Getting even more specific, A Journey To Frugal shares the following idea for letting kids budget their lunch expense. She encourages her son to bring home his cellophane lunch baggies and plastic spoons to wash out for future use:
I told him I would pay him for each of the items he remembered to bring home! Each item has it's own value and he would be paid accordingly. So, here's the way it broke down:
1 penny for each of 2 zippered baggies
2 pennies for the spoon
1 nickel for the plastic bowl.So each day he has the potential of putting 9 cents in his piggy bank, for a total of 45 cents each week. Over the course of 180 school days that's $16.20. It may not sound like a lot to you and me. But to him, it's a new toy!
Whether it's on a larger scale or a smaller one, there are
