Financial Planning Friday: Summer Tips for Raising Financially Smart Kids
June 23rd, 2017 by Anchor Bay Capital's Investment TeamSummer is here! At this point in June, most of us have adjusted to those younger humans that are around the house more now that school is out! Whether you have kids that are home from college or in the early years of elementary, you are most likely getting to spend a little more quality time with them during these next few months. While our attention is mostly on Summer fun, now is a great time to teach your kids some fundamental money lessons! Here are some ideas:
Elementary Age:
I think the focus with teaching elementary age kids about money should typically be focused on responsibility and learning smart financial decisions. It is good to start with learning how much things cost.
Activity: Helping with groceries.
What to do: Make a grocery list with your children by having them look through the pantry and fridge to see what is needed. Divide the list so that the child is responsible for certain items. At the store help the child find the item and cost. Help the child compare brands to see the difference between brand names and generic items. As the item is selected have the child write down the cost and total up their list at the end to see how much their list will cost them. (A bonus activity may be to help the child find coupons for their items so that they can see how to save money.) I’ve found this is a simple activity that can teach a child the value of money for everyday necessities.
Middle School Age:
I think this is a great age to get kids excited about saving money. If they don’t have one already, they need some type of savings account. This is also a great time to start learning about compound interest.
Activity: Financial Vision Board
What to do: Help your kids create a vision board to visualize something they want in the future. If you have never used a vision board, it is simply a visual with pictures, words, etc. representing future goals. They can create, go online, cut out of magazines, anything that will show a visual. Start with the question, “By the time you are an adult, think about things you would like to get, places you would like to go, or things you would like to do.” Once they are finished, on the back of the vision board, they should write down each vision and the cost next to it. (This is where you may need to help a bit.) Then they should decide which vision is most important and mark that one with the number 1. Use this vision to teach how long they would have to save to get there. There is a great compound interest calculator here:https://investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator
This is a great way to teach savings motivation, planning, and financial priorities.
High School Age and Beyond:
As your kids mature and maybe have some money of their own, you should get them more involved with advanced decision making. This is the time to learn about budgeting, cash flow, risk and return. Use the latest technology to get them looking at their money!
Activity: Financial Dashboard
What to do: There are many apps right now that allow you to aggregate your financial accounts and see them on your phone or on your own personal website. Contact us if you would like to get the Anchor Bay Financial Dashboard for your kids! It’s totally free! I recommend helping your child set up their own dashboard and connect their spending and savings accounts. The dashboard should have a budget tool that alerts them when they have over spent. This is a great activity to challenge kids to make their money last longer.
Alternate Activity: Stock Research
What to do: Have your child pick a company that they are interested in. This can be a fun conversation by pointing out companies that they use everyday like Snapchat, Apple, EA Sports, etc. Look up the company stock online to help them see the price, historical performance, etc. Depending on your investment experience, you can get more in depth on the stock fundamentals or have a conversation with your advisor to help. Create a hypothetical portfolio to track through the summer by allocating a fictional dollar amount to the stock. There are several websites online that allow you to do this like Google Finance. You can maybe offer your own incentives to the activity like if they make a certain amount of fictional money on their investment, they get a real dollar amount to invest for the long term. This is a fun way to get your kids involved in investing by participating in the performance of the companies that they use.
There are many other ways to teach kids about money, but the most important is your example. I was once told that as a parent you are an open book that your kids are reading on a daily basis. What you say, do or feel about money will most likely have an effect on your kids and their own relationship with money. If you need help, we are here to provide objective advice and get you on track so that you can raise financially responsible children. Be creative and remember it’s Summer, so have fun!