Talking Money

Jim Wasserman

APRIL IS FINANCIAL Literacy Month. If that doesn’t excite you, imagine how your children feel.

Still, consider this an opportunity to begin or reinforce your kids’ financial education. Many of my students told me one of their parents was into “finance,” but when I asked how the parent handled the family money, students would just shrug and say that was all they knew.

Children don’t like a straight-up lesson, especially from a parent. The trick is to make it seem casual and as blended into everyday life—theirs, not yours—as possible. Here are nine ideas for a wide range of ages, from elementary to high school. Choose the ones that fit your scion:

  • When shopping, compare two items, like two shirts with different prices. Ask your child why the more expensive shirt costs more. What do you get for the extra money—and is it worth it? Even better, have your child ask the sales clerk.
  • Ask your know-it-all tech-savvy child to help you set up some money management software. You can then have your child help you “test” the software with one of your child’s accounts, whether it’s a college fund, credit card or bank account. You might monitor the account together for a couple of months to see how the software works, and maybe have a conversation or two about financial issues along the way.
  • If you have a 529 or other college savings plan, include your child in monitoring its growth and how the balance compares to the current cost of college. Maybe have some strategy sessions on how to pay for college, which might involve looking at U.S. News & World Report’s list of best value schools.
  • Take a look at some mutual funds or individual stocks related to your child’s interests, which could be anything from fashion to sports to environmental sustainability. Make predictions about what will happen if, say, a new product is rolling out, and then check back a month later. Talk about why you were right or wrong, and what are good business strategies.
  • Put some creativity into a family budget challenge. Pick a family event, like a vacation or outing, and figure out how it can be done in a less-expensive fashion. Incentivize creativity by splitting the savings with your child, or using a part of it for an extra activity. Ice cream is good.
  • Delaying gratification is an important skill. Small children’s abilities can be tested—and then discussed with them—using the marshmallow experiment. For older kids, have them set a goal of buying something they want later, say at the end of the year. Then promise to match a percentage of the money the child earns or saves toward the purchase. Make a thermometer chart to keep track.
  • If older children want money for something, ask them to make a presentation, similar to a business seeking a grant. Have them lay out the costs and benefits of getting the money, and then question them about their presentation.
  • Budget a fixed amount for an event, anything from your child’s birthday to planning a “night in Italy” family dinner. Then have your child figure out how to allocate funds to make it the best experience. Whatever your child decides, that goes, assuming it fits within the budget. Don’t come to the rescue if your kid messes up.
  • Spending habits are formed from a lifetime of nudges, so help your children become savvy consumers of media. Watch media your children like, asking them to explain the nudges and overt demands of consumerism they see—from product placement, to banner ads scrolling below the video, to open solicitations. Point out the slyer methods of persuasion or even make a hunt for them. Reassure your children that they’re too smart to fall for these tricks.

In the comment section below, feel free to suggest other activities. Do you include your child in buying decisions? Do you try to model smart spending? Responsible money habits aren’t something you tell your children about or, worse still, do for them. Instead, they’re built over time by the things you and your children do all year round and, most important, do together.

Jim Wasserman is a former business litigation attorney who taught economics and humanities for 20 years. He’s the author of a three-book series on how to teach elementary, middle and high school students about behavioral economics and media literacy. He’s also authored several educational children’s books. Jim lives in Texas with his wife and fellow HumbleDollar contributor, Jiab. Together, they’re currently working on a book, “Your Third Life: Reflections on Finding Our Way by Taking the Long Route.” Check out Jim’s earlier articles.

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