With the majority of high school graduates failing to receive an education that includes basic finance, the teaching falls on parents who must accept the responsibility of teaching how to save, share, spend and invest any money kids are given or earn. Considering how essential financial skills are in navigating life, it’s ridiculous that kids are required to take multiple semesters of far less important courses than basic finance.
Beth Kobliner, author of the New York Times bestseller Get a Financial Life, highlights the importance of teaching kids proper money management when she said, “Look at the mortgage crisis and how many families lost their homes—3.9 million foreclosures. Look at the amount of money—$1.1 trillion—we owe in student loan debt.”
“The amount—$845 billion—we owe in credit card debt. It’s pretty clear that adults don’t know much about money. To help the next generation avoid the mistakes of their elders, and to live financially fit lives, they need to be taught the essentials about money.”
Money Motivates Adults, Why Not Kids?
While it’s true that many other things can serve as motivation for an adult, many of those are based upon if the adult has proper compensation in place and a solid financial position. In other words, if an adult is getting paid a nice salary or has no large debt, then workplace atmosphere or career growth are motivators. Make the compensation less or have large debt, and money drives the motivation. In any case, adults need to work in order to earn money, pay bills, invest and save. If we already know kids will be growing up to do the same, why not start teaching them how to manage it all from an early age?
Surprisingly, children as young as three years old can already grasp basic financial concepts like saving and spending. Research done by the University of Cambridge also revealed that children’s money habits are formed by the time they turn seven years old.
BusyKid was created with those basics in mind. Designed to teach kids about the relationship between hard work and money, our innovative app also encourages kids to develop strong work ethics while learning essential money management skills at the same time.
Here are some ways parents can use money to encourage kids to help with the household chores and prepare for situations that come as early as their first paycheck:
Teach them that money is earned and not merely handed to them.
As part of getting your child to help with the chores at home, consider paying an allowance for things they do like cleaning their rooms, mowing the grass, or taking out the trash. Again, the primary idea is to teach your kids that money is earned and not just handed to them.
Help them understand more than what something costs
If your child has been eyeing a toy for quite some time, do more than say, “That toy costs $5.00.” Instead, use it as an opportunity to teach them what it takes to earn the money to buy the toy. If the child is earning $2.50 to shovel snow, you can share that it took shoveling snow twice to afford the toy. By doing so, you’re helping the child understand the effort it takes to earn the money to buy the toy.
Give them lessons on opportunity cost.
When kids earn their own money, it’s a great time to teach them about opportunity cost. Simply put, you teach them that if they buy something now, they won’t have the money to purchase something they need or want more in the near future.
For instance, if they purchase a video game, they won’t have enough left to buy the pair of shoes they have always wanted. Kids need to learn how to weigh their options early and clearly understand the possible outcomes. It’s also a great way to have them start thinking ahead.
Conclusion
While it may not be the only motivator, contrary to popular belief, money can be an excellent motivator for kids especially when it comes to helping with household chores. It is also a fantastic opportunity for parents to teach kids about hard work and proper money management so they can lead financially fit lives in the future.
