Do Your Kids Understand Money?
If you are like most parents you see a real difference between how you used money and thought about money as a young person compared to how your kids use money and think about money in their everyday lives.
Kids in today’s world full of information flowing from all directions and all kinds of sources are very interested in what money can buy. They don’t always understand what it takes to earn an income that would support purchasing the thing they want and still include paying rent, insurance, buying food, etc.
Here’s an insightful conversation between one father and son.
Like many 14-year-old boys, my son loves sports cars and is always researching the latest models, engine sizes and top speeds. So I wasn’t surprised when, on the way to a soccer game recently, he said, “Hey, Dad! Take a look at that cool Corvette!” Shiny, sleek, cherry red and zipping past us — I had to admit, it was eye-catching. But what he said next took me aback: “C’mon, Dad, you should buy one,” he said. “They’re only $57,000.”
To my son, $57,000 seemed like a relative bargain when compared to the Ferraris and Lamborghinis he sees in magazines and online, with prices approaching $400,000 to $500,000. Thanks to the Internet, music lyrics and the chatter loop in school, kids today seem to know the price of everything. Walk down the street and they’re running the numbers — the $120 brand-name sneakers, the $200 jacket, the $38 shirt, even when bought on sale. They can’t afford these things, but they have the information at their fingertips. They even know the value and price of their house — and of all the houses in the neighborhood.
However, for many kids — my son included — understanding what it takes to pay for these items is another thing entirely.
Seizing the opportunity for a teachable moment, I asked my son: “Do you know what the typical household income is in this country?”
Shrug. “Not really.”
“Just about $50,000.” Through the rear-view mirror, I see the gears turning in his head. This was one number he didn’t know.
– via The Huffington Post
Taking Small Steps to Help Your Kids Understand Money
We are all moving fast and working hard to stay on schedule. It may seem impossible to add conversations with your kids about money. Not to mention you might be confused about how to have the conversation in a way that will really make sense to them and create understanding.
Here are a couple of simple ideas of how to work money conversations into your day at different ages.
It’s important to start when they are young: A child as young as three can start to get a sense of how much things cost. When a daughter goes with her father to the grocery store, for example, he can point out simple prices, like a dollar for a can of soup, another dollar for two apples, and a third dollar for some bread, and then ask her: “How much does that add up to for dinner?” Suddenly, food doesn’t just appear; it’s paid for. And parents can reinforce the idea of saving money by giving a child a piggy bank or a savings jar to be filled by a small allowance of a few coins each week, so she can watch the little pile of money grow.
In another few years, at age 11 say, a parent might add a savings account to the mix, giving a child a place to deposit cash from odd jobs or a birthday check from a grandparent. That’s a great time to talk more about the value of savings — that saving means keeping. And it’s not too soon to start introducing the concept of a budget, to demonstrate that money is finite and everyone has to make choices. For the average family, a mom might point out that she has $350 to get through the week, and if the groceries run $100, how much does that leave for everything else? She might even mention this to her son when they’re out shopping. “I can’t afford that this week,” she might say. “So I’ll have to wait until next.” That way the child learns about waiting, always a good lesson in personal finance.
– via The Huffington Post
How do you talk to your kids about money? How did your parents help you manage your money as a child?