Talk openly about finances and turn money management into a game
Reporter: Carys Mills
If you want your kids to be financially savvy, the authors of a new book say it’s important to start young.
“You can’t go at this as an academic exercise, you’ve got to do it in such a way that the kids don’t even realize they’re learning, ” says personal-finance expert Gordon Pape, who co-authored the recently released Money Savvy Kids with his daughter, Deborah Kerbel. The book delves into budgets, first bank accounts, savings and more.
We asked Pape and Kerbel to share some of their top tips for teaching kids financial literacy:
Money talks: Not all parents find it easy to talk openly about money. “So many families are very tight-lipped when it comes to money and money management, ” Pape says. “So the kids grow up, as I did, in a world of ignorance.”
The best approach is to answer children’s questions honestly, he says. But that can be difficult for parents who themselves struggle with money matters – so they should brush up so they can pass on sound tips to their own offspring.
“You can’t teach kids what you don’t know.”
Play games: Teaching kids about money has to be fun, whether it’s through practical experience, books or games.
Kerbel, the mother of 7-year-old Dahlia and 10-year-old Jonah has found some books are particularly good at teaching money lessons, while still being fun. The Lemonade War by Jacqueline Davies, for example, is about siblings opening up a stand, and includes business concepts and math problems.
For younger kids, starting at around 5, it’s possible to play basic games, including coin recognition.
“First they have to learn what each coin is, ” Kerbel says, by identifying the animals (for example, the nickel’s beaver) and symbols on each denomination.
Give an allowance: While vacationing at Disney World, Kerbel and her husband experimented by giving their son and daughter, who were then 9 and 6, $20 a day during the vacation with which to pay for souvenirs and treats.
Kerbel observes that while it might sound like a lot of money, it had to reflect Disney prices – and her kids knew that was it. If they wanted something more expensive, they had to save and budget.
“All of a sudden they weren’t begging us to buy them things, ” she says. “They were budgeting, they were making calculations, they were planning ahead.”
The younger child, she says, got her parents’ help with calculations.
Charity case: Partially based on the Disney experience, Kerbel decided to give her children regular allowances about six months later. Each child receives $1 a week per school grade.
As well as using online tools to track how much they spend, both children must donate some of their allowance to a charity. The kids are involved in deciding which charity they support.
First published in the Toronto Star on January 7, 2013.