Almost every financial skill your child needs will fit under one of these topics: setting goals, earning money, spending money wisely, understanding the time value of money (saving and investing), using credit responsibly, and protecting assets. Below are some exercises you can do with your children to engage them in discussions related to these topics.
The Change Jar: The Value of Money
This is a great exercise for younger children. Help your child locate a clear jar. Place the jar in a location that is easily viewed by the child. (You can screw the lid on tightly if there’s a danger that an especially young child will be tempted to put any coins in his or her mouth!) Make a game of locating spare change around your house and place what is found in the jar. As you place the coins in the jar have your child tell you what kind of coin it is. You can point out that five pennies equals one nickel, that a dime is worth 10 pennies or two nickels, etc. Next, talk about what the child might do with the money in the jar once it is filled. Determine something the child could quickly save for to provide positive reinforcement for the action of saving and planning.
Coupon Clipping: How to Stretch Your Dollars
Take a current grocery store flyer and direct your child to circle items you would most likely purchase at that store. Discuss the amount of money you will save by buying an item on sale vs. full price. Demonstrate how to organize a shopping list by planning meals ahead and buying just what is on the list. Discuss the difference between a “want” and a “need” item. On your list include items the child has identified from the store flyer. Take your child with you to the store. As you shop, compare the prices on the store flyer to the prices on the shelf. Total up the amount of money saved thanks to your child’s work in identifying sales and other discounts. Consider giving your child a portion of the money as an incentive for continuing to find ways to stretch your dollars. If you have more than one child, assign each one a different store flyer to examine and reward them accordingly.
Spending Diary: How to Track Expenses
This activity is for an older child or teen. Explain that a study on how teens spend their money revealed that the top five items they purchased were clothes, food, soft drinks, candy, and CDs or recorded music. Ask your child to estimate the average cost of a soda from a vending machine ($1.25). Have the child estimate the number of sodas he or she buys per week. For example, if your child purchases a soda three times a week, explain that the long-term cost of that purchase is $15 per four weeks or $195 a year. Ask, “What else could you purchase for $195?” On a piece of paper write the following headings across the top: date, item, and amount. Give your child a set amount of money once a week for a four-week period. The child “earns” the money by keeping track of how he or she spends it. As you give your child the money each week, collect the tracking page and have a brief discussion about how it is going. Help the child start a new tracking page. At the end of four weeks, sit down with your child and examine the spending records. Discuss the spending trends. Calculate the impact of continuing the buying pattern observed and look at how money might be saved for long-term purchases.
Need More Resources?
Make sure to visit the other sections dealing with credit management: