By Brittney Monteith | Written Under
Money Management, Useful Tips
Prepare Them for Freedom Instead of Financial Burdens
How did you learn to be smart about money?
Maybe it was through some hard lessons. Or some great examples within your family. Or some trial and error.
Either way, we hope you’re rocking it with your finances these days. That’s not only good for you, it’s also good for those who depend on you.
But what about the generation growing up now? We hear over and over how those graduating now have enormous student loans but lack the understanding to manage their budgets well. What about the students in elementary, middle, and high school?
Studies show that of the kids today who receive allowances, only 1 percent save any of those dollars.
Without the right financial know-how, our youth today may be entering adulthood without important basic principles to mange their money. Saving, investing, and spending wisely can make an enormous impact on their lives, the lives of their families, and for generations to come.
There are things we can all do to help teach the next generation about financial choices and saving. We’re covering an extensive list here!
Teaching the Next Generation
- Talk openly about money with and around kids in your family. It’s really never to early to hear you talking about what is worth spending money on and what you’re saving for, and how you have to make choices between things.
- Be the example you want them to follow. If you want to teach youth to be generous – let them see you making donations and buying others things they need. Have them help you decide what causes to support. If you want them to know how to save, talk about how each paycheck you put money away, and what your savings goals are. Say no to them so they learn that money isn’t always available. Buy frugal gifts, shop around, and talk about how you balance splurges with necessities.
- Play with fake money. Monopoly Junior is a great option to teach students some basic principles of income, debt, and being strategic about purchases. It’s not the most perfect tool, but it gives a good starting point.
- Provide choices and limits for items or experiences you give kids in your family. If you always hand over money when they ask, they won’t learn that there is a limited amount of it available. Set a maximum dollar amount, contribute a portion to a purchase but have them use the rest of their money for the balance, or give them a choice between a couple of options that are within your price range.
- Balance positive reinforcement and steady boundaries for kids and money. Praise generosity, good choices to save, and constraint. Also hold tight to the boundaries and limits you’ve set.
- Use the 1/1/1 method with funds your kids, grandkids, or other family members receive. One third to spend, one third to save, and one third to give. And make sure the savings isn’t exclusively for spending eventually – savings is savings, and your family member can have a jump start on money to buy a car, to pay for education, or to do something really cool such as a missions trip if they have money in savings they can draw on.
- Open a savings account in their name so they can earn some interest. If you’re saving at home, then try to actively demonstrate how interest works – each month, count up what they’ve saved and add a small percentage to it. Then they can see the reward of what savings can do.
For younger students, you can even read books with them to start instilling good financial sense. We recommend the following:
- Rock, Brock, and the Savings Shock, by Sheila Bair, the story of twin brothers who are offered money each week from a family member and have the option of doubling it or spending it.
- Alexander, Who Used to be Rich Last Sunday, by Judith Viorst. Alexander had a dollar last Sunday and there were so many ways he could spend it!
- Bunny Money, by Rosemary Wells, is the story of bunnies trying to buy a present for their Grandma, but they keep running out of money before they can!
There are many ways to teach kids in our families to manage money well, focusing on savings. Try some of these tips out or come up with your own that will help prepare today’s youth to live with financial freedom and restraint as an adult. For ideas on how to work with a bank on setting up accounts specific to kids and savings, check out AmeriChoice’s options. Let’s make the next generation more prepared than ever!