School’s out for summer, but that doesn’t mean your children need to go on a learning hiatus. Take advantage of summer vacation to teach your kids the ABCs and 123s of money management. That doesn’t mean you have to tuck your kids in each night with tales of Donald Trump and Warren Buffett. But while you’re feeding them a diet of Greens Eggs and Ham, slip in some dollars and cents lessons as well. Given the notoriously short attention span of most children, we’ve whittled them down to one word each.
1. Work
Let your children know that you work to earn money, and that they can too. Some parents like to assign their children essential household chores that they don’t get paid for (making their bed, clearing the dinner table) but reward them for going beyond the basics (raking leaves, sweeping the floor).
2. Save
Encourage kids to save, perhaps by offering them a matching contribution – say, 10 cents on the dollar. Once they reach $50 in their piggy bank, consider opening a high yield savings account for them so they can watch their money grow.
3. Invest
Explain the beauty of compound interest and the benefit of saving over many years to your children. Seeing how saving pennies now can turn them into a millionaire down the road may turn the most spendthrift kid into a super saver. You can even demonstrate compound interest with the statements from their high yield savings account. (see Lesson #2, above.)
4. Budget
Explain to your child that he can buy the bubble gum, but then he might not have enough for that new computer game he’s been saving for. Take any opportunity to illustrate the real-life prioritizing that your children will have to make throughout their lives. You can even show them the basics of your family budget.
5. Give
Teach your kids the importance of sharing what you have in a responsible way. Tell them when you give to a worthy cause. You may even want to suggest that they set aside a portion of their savings for a charity of their choice.
6. Borrow
Borrow wisely, that is. Let your kids know that the purchases you make with your credit card aren’t free. Show them the difference between good debt and bad debt. Your house: good debt. Debt from buying designer clothes and expensive toys: not so much.
7. Learn
Pick an interesting newspaper business section article – perhaps about their favorite toy maker or amusement park – and read it to them. Turn on the financial channel for a few minutes and explain the procession of letters and numbers marching across the bottom of the screen. (It’s a stock ticker, in case you were wondering…)
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