School is almost out for the summer and for kids that means days filled with sunshine, water activities, and melting popsicles.
We’re lucky enough to live in a community that offers a variety of outdoor activities to keep kids active throughout long summer days, but what about keeping their minds engaged? Having kids in tow all summer will offer many teachable moments regarding money and help extend their learning outside of the classroom.
Summer is a great time to teach good financial habits, regardless of the age of your child. Kids soak up information via interactions they see around them. Think about a simple trip to the pool for an example:
When the gas tank was filled in order to get to the pool, a credit card with a chip was swiped through the card reader on the gas pump. There was no human interaction as a couple buttons were pushed and the hardest decision was whether or not to get a receipt. This differs from the way snacks were purchased with cash at the poolside snack shack where an employee exchanged product purchases for cash. The employee then had to ring into the cash register the money provided and determine the amount of change to give based on the total bill.
It’s never too early to start discussing money, and finances in general. Lessons can be age-appropriate by relating the conversation to topics about which the child is interested.
Keep your chats short, sweet, and frequent. Instead of having an occasional, long conversation that makes it easy for the child to lose focus, have many exchanges throughout the week when opportunities present themselves. Keep the chats informative but not overwhelming, so as not to turn the child off from the topic all together.
Learn by Doing
Let the child learn through experiences. Encourage them to play the banker role in Monopoly, let them run the garage sale, or give them an allowance requiring them to pay for items such as ice cream with their own money in order to learn the value of budgeting.
Keep the conversations you have light. While it’s good to relate topics that are relevant in their life, detailing issues that threaten their perception of a stable home life should be avoided until they are more mature. For example, if the conversation turns to being upside down on the house mortgage, it could scare kids into feeling insecure.
The goal of starting kids on a path towards financial literacy is to help empower them to gain self-knowledge, self-confidence, and independence. There are qualitative and quantitative aspects to financial literacy.
Qualitative aspects of financial literacy include how they develop a relationship with money and interact with those who have similar or different views regarding money. This is an important attribute in many facets of relationships.
Quantitative aspects of financial literacy include how their financial well-being develops and the financial foundation on which they build their entire life.
Don’t get overwhelmed – there is value in teaching kids about money and because of that, there are many public and private options to help supplement parental guidance.
Non-profits such as the National Endowment for Financial Education, JumpStart, and United Way’s Financial Literacy Coalition are a few examples. Government programs are also available at the Federal, State, and local levels.
Finally, local libraries, colleges, and businesses offer workshops, classes, and programs regarding financial literacy for children. In fact, Lighthouse Wealth Management is currently creating programming for a badge workshop for Girl Scout Cadets (grades 6 – 8) about developing and understanding a budget. The workshop will be ready for the girls this fall.
Fun Activity: Give the kids their ice cream budget for the summer on the first day of summer. Give them $50 for the whole summer which is 10 weeks long. This allows the child to have $5 to allot for ice cream each week. Help the child understand how many ice cream treats $5/week will allow. Whether the money lasts for the first week or the whole summer, one thing’s for sure: it’ll be a learning experience.
Katy Chase is a financial advisor at Lighthouse Wealth Management. She and her husband, Tom, reside in the Lake Linganore community. She can be reached at KATY@LIGHTHOUSEWLTH.COM with questions.
Securities offered through First Allied Securities, Inc. Member FINRA/SIPC. Advisory services offered through Lighthouse Wealth Management, a registered investment advisor not affiliated with First Allied Securities Inc.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.