Teaching Kids about Finances
The kids have been home from school for several weeks now and they’re probably looking to you for things to do. How about taking this opportunity to teach them about the benefits of saving and investing? Teaching kids about money is important, and the money skills children learn now will follow them for a lifetime. And kids who grow up in money-smart households typically have a greater appreciation of the value of savings and investing. Here are a few fun ideas to do with your children to help them understand the importance of savings versus spending.
Making change is an important skill that even young children need to learn; making a game of it is one of the best ways to teach the skill. Parents can give each child a set of play money and a list of items to buy. The child then adds up the cost of the items, pays for them and counts out the correct change. For older, more advanced children, reverse the roles. You pretend to pay for something with more money than is needed and let them give you back the correct change.
Learning what common items cost is another important skill. The next time you’re getting ready to go to the grocery store, write down a list of items you typically buy – maybe the items are your child’s favorites. Ask them to write down the cost of each item while you’re going up and down the food aisles. When you get home let your child use a calculator to total the list. This little exercise helps them understand how much things cost and which is more/less expensive and gives them a fun reason to brush up on their calculator skills.
Coin Flip Game
Many kids, as well as some adults, assume that flipping a coin 10 times will result in close to a 50/50 distribution of heads and tails. In the real world, however, this is rarely the case. Parents can reinforce this important lesson by handing each child a coin and asking them to flip it 10 to 20 times. The child records the results of each flip and then looks at the distribution of heads and tails. This interesting game provides a valuable lesson in probability and statistics.
Back to School Sales Shopping
Kids like getting deals just like adults. As you go shopping for back-to-school clothes, help your older child figure out how much they’ll save if they buy something at a discount. Give your child a budget to work with and help them figure out sales prices, etc. Make a game of it by seeing how many things they buy with the money allotted.
Pick a Stock
And for those of you with the older set of kids, talk to them about building a mock portfolio of stocks. Track it daily or weekly to see how it performs throughout the summer. Picking stocks to use for this exercise doesn’t have to require a lot of research or resources. Choose companies that manufacture the favorite things in daily life, such as electronics, soft drinks, shoes, clothes, restaurants, etc., and make sure they are publicly traded companies by checking the labels and packaging of the products. Take the opportunity to talk to your children about being a consumer and how that translates into investing in a company.
No matter what you choose to do, have fun with it. Introducing your kids to the world of finance can and should be just another enjoyable adventure along the way.
Dawn R. Dickson is a financial consultant at Benjamin F. Edwards & Co. in Melbourne, Fla.
This article is provided by Dawn R. Dickson, a financial consultant at Benjamin F. Edwards & Co. in Melbourne, FL, and was prepared by or in cooperation with Benjamin F. Edwards & Co. The information included in this article is not intended to be used as the primary basis for making investment decisions nor should it be construed as a recommendation to buy or sell any specific security. Benjamin F. Edwards & Co. does not endorse this organization or publication. Consult your investment professional for additional information and guidance. Benjamin F. Edwards does not provide tax or legal advice. 2014-0612 exp. 09/30/2016. Benjamin F. Edwards & Co., Member SIPC and FINRA