How can we teach and build experiences for kids and young adults around finances? Here are 10 ways!
Finances are just for adults, right? If you said yes, then I respectfully disagree with you. We sometimes say to ourselves “I wish I started learning about finances when I was younger.” So, why is it that our children can’t start learning about finances at a young age? In the times that we are living in now I believe we should, if we haven’t already, share our view of finances with our family in our household. Now, I am not saying that your child should know how much your credit limit is or the balances on your loans. What I am saying is, a child should know the basics of finances like not to go over 30% of credit utilization and staying under 10% is preferred. They should learn about budgeting and investing. They should learn about APR and amortization schedules. You don’t have to show them your financial statements if you are uncomfortable with that because there are plenty of examples on the internet. Our schools do not teach this information, so we have to start finding ways to do it ourselves. Here are 12 ways we can teach our kids and young adults about finances.
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1. Children’s books
Children’s books are a growing field in 2021. Just like we would buy our child a book on ABC’s. We can invest into getting books about entrepreneurship. There is an author named P.E Barnes who has a children’s books series. The book series portrays little children as bankers, franchise owners, real estate investors, and so much more. Children’s books are a great way to teach children ages 4-8 about finances and entrepreneurship at an age appropriate level.
2. Family board games
We have heard of monopoly. It’s a great game to learn about not just money but finances. I remember playing monopoly and witnessing my nephew ask questions. He asked questions like “What is rent?” Why do I have to pay? Is it better to own the blue street or orange? Seeing him ask these questions showed that if we find creative ways to teach children about money, they will naturally become inquisitive and ask questions.
3. Reviewing a Credit report
When we were growing up most of us did not know what a credit report was until we went to college. By then we were way behind in starting our credit journey. Teaching what is on a credit report can help a child be disciplined in their spending. Teaching about credit inquiries, checking for incorrect information, and how often to monitor your credit are some great topics to start with.
4. Budgeting oversight
What in the world does this mean? Well Budgeting Oversight involves teaching a budgeting strategy and overseeing how a young adult is able to use the funds they were given. For example you may something like this to your daughter; “Jennifer we have $280 budgeted for groceries this month. Go around and get an inventory of what we need and create a shopping list. Then use the strategies I taught you to get what’s needed with the $280 available.” Finding deals and buying what’s needed and not always what’s wanted is sometimes the lesson children need to learn. I learned this from a friends mom who taught her this and now she is a budgeting wizard. She finds deals on everything and saves tons of money.
You don’t have to use your personal credit report for this, but you can find some examples on the internet. Interest is a way that the banks make a chunk of their money. You can use a credit card statement as an example. You can teach your child what APR means and what it means when we carry a balance? Also, you can teach them what happens when we have a 4,000-credit limit with a $3,988 balance and we are only making the minimum payment?
6. Discuss the debt traps
I wrote a post about this because it truly is a problem, especially in the black community. When we take on bad debt there are consequences that can happen over time. Teaching young adults about student loans, credit card debt, home mortgages, and pay day loans can help them be wise about the type of debts they are getting themselves into. I know that portraying a mortgage as a debt trap is debatable, but if you are a homeowner and you are relying on just your 9-5 job to cover your mortgage you can be making a big mistake because anything can happen, and the bank owns your home until the balance is paid in full. All I will say is make sure you go over your amortization schedule.
7. Start a stock portfolio
This one is fun if you understand the market and know how to invest. When a child learns about building wealth and why it’s important it makes things a little easier when they grow up. Teaching a child to look for a discount in the market can help compound that child’s portfolio and he or she can continue to compound when they are an adult and start their families. Not to mention if you built a portfolio yourself you can pass that down to them as well. This can help make the journey to create wealth a less stressful process.
8. Help find deals for things they want.
I still laugh about this because I remember when I asked for an Xbox and the price was over $290. The price was “too high” and so I waited until the holiday season ended and slowly but surely the price dropped down to $250 and I was able to get my Xbox and find some deals on games which added up to the original price. I used the example earlier for budgeting and groceries, but the same can be applied for shopping for the things they want as a child.
9. Build a side hustle together
If your child is interested in becoming an entrepreneur, building a business together and learning together can be a great teachable moment. The both of you can decide on what to sell, like cakes, food, candles, shirts or what ever is manageable for the both of you and grow the business together. Teaching hard work and what is needed to keep a business going is a powerful lesson when learned at a young age. Especially since some of the method mentioned above can be applied.
10. Attend conferences together and build an experience
When your child is old enough and has grasped some of the financial lessons you have taught, going to conferences together can be a great experience to further solidify the knowledge they have gained. I remember when I was in Coral Gables while visiting a friend and their neighbor owned a 7-bedroom home and drove a Ferrari. I was around 16 years old and I had never seen a house that big in person before. Nor have I ever seen a Ferrari in person either. I only saw Ferraris on the tv, internet, and calendars. Seeing that house and car in person was motivation. Now a Ferrari might not be what motivates your child but maybe it’s architecture, traveling, owning a corporation, or just being financially independent. Experience can keep the mind focused so that we can achieve and build the resilience needed.
Thank you for reading my post “How can we teach and build experiences for kids and young adults around finances.” I hope that this list helps in creating some ideas of how to teach your kids about finances and building the experience needed that can help them in the long run. Some of us have never had this experience and wish that we could have learned about finances when we were kids. Have you tried any of these ways to teach finances above? What about building experiences? How did it go? What were some challenges that you experienced? What are some more things we can add to this list? Please comment and share below. If this post can be helpful, please share and if you are new to Millennial Oaks please subscribe 😊.