Could it be that Americans need a dose of the financial basics?
With the global economic crisis shedding light on the lack of knowledge that people have about money and how to manage money, it is critical that we view this crisis as a “teaching moment” for our children. At Junior Achievement, we teach children in grades K-12 about financial literacy and we offer you some ideas about how to help you begin the conversation at home.
Parents, here are five ways to begin the money conversation with your kids no matter what age they are:
1. Pack a lunch instead of buying at the school cafeteria and make that into a family cost-savings challenge. Have kids come up with ways to increase the cost efficiency of a brown bag lunch versus the school cafeteria. For example, instead of buying individual snack packs at the store, buy a larger package and have your kids help you separate out the servings into baggies. Then tally the amount of money you saved by doing this.
2. Buy store brands. Help your kids compare the ingredients lists of their favorite cereal with the store brand, showing them the similarities. Demonstrate to them that the difference in price is due to packaging and branding and not taste. (Perhaps host a taste-test to verify and track which store brands maintain or beat the quality of brand name products.)
3. Develop a reward system. The next toy your child requests, develop a reward system so that they can earn it. This brings new meaning to allowances where you and your kids can track effort against reward.
4. Be a smart shopper. Go through weekly catalogues and coupons with your kids to help you make your grocery lists for different markets. Explain why it’s good to purchase some items at certain stores and other items at other stores. For example, you can save $2 on a gallon milk by purchasing from a warehouse store.
5. Lead by example. Show your kids ways you’ve cut costs. Maybe you went from getting a $3.50 latte a day (that’s $17.50 per week or $70 per month) to bringing your own coffee to work. Then explain what you plan on doing with the savings. Help your kids figure out a similar item they can “trade down” for.
Trying just one of these suggestions can help your children become comfortable with money and asking questions about financial decisions. The sooner you begin the discussion and the practices, the sooner your kids can begin making wise financial decisions — you may be surprised at some of the ideas they have about saving money. There are probably many more examples of how to engage your family in the financial dialogue and they all need to be put into play sooner rather than later.