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Centsible ways to teach kids healthy money habits

It is imperative to secure your child's financial future

Set your kids up for financial success

In school, most kids only learn algebra, calculus, and trigonometry but not how to budget, save or invest. The older we get, the more responsibilities we have that make it challenging to focus on learning financial principles, which is why it is key to start teaching kids healthy money habits at a young age.

Lacking financial literacy and not knowing how to manage one’s personal finances cost Americans $352 billion in 2021. A Federal Reserve report indicates U.S. household debt increased to a record $16.15 trillion in the second quarter of 2022 and Americans loaded an extra $46 billion on their credit cards this year, the sharpest increase in more than 20 years.

Gregg Murset, Certified Financial Planner and CEO of BusyKid, shares his tips on how parents can teach kids critical financial skills at home and help their kids learn to be good money managers for life.

Learn to earn

Kids today are addicted to OPM—other people’s money—but they need to learn to associate money with earning it. Chores are a great way to introduce kids to the “earning it” mentality. Starting as young as five, parents can assign kids chores or tasks to do around the house as well as a set amount they will earn for correctly completing the chores. This can also help prepare kids for the real-world responsibility of holding down a job and earning a paycheck.

Spreading the dough

Setting boundaries with kids and letting them know they can’t just squander all the money they earn on candy and knick-knacks at the store can help them learn healthy spending habits. Any money kids make should be broken up into three categories: spend, save, and invest/donate. Parents can discuss with their child the percentage of money they can spend from the total amount they earn as well as the amount they need to save and invest/donate. Parents need to stand firm with the numbers or percentages that are decided, even when kids are begging or crying for the latest toy or video game. 

READ MORE: 9 ways to teach kids about money

There will be rainy days

Saving doesn’t seem nearly as fun as spending, but after witnessing how Covid impacted people’s finances and the way inflation made prices skyrocket this year, it’s a critical skill kids need to learn. Having kids put a certain percentage or amount away from the money they earn from doing chores, running a lemonade stand, mowing grass, babysitting or money given to them for a birthday or holiday, can make a world of difference.

Investing is really saving (for your future)

It might seem absolutely crazy to introduce young kids to the stock market and the practice of investing, but we all saw what happened with GameStop and the other viral investing opportunities that have been plastered all over social media. It’s important that parents step in and help teach these lessons before social media becomes their child’s financial advisor. The stock market doesn’t have to be a scary and overwhelming thing. Parents should have their kids start slow by picking a company (or product) they use and are familiar with for the first investment. Use an app like BusyKid, which can make the process easy and allows investments as little as $10.

Borrowing has its price

Most kids think of credit cards as get out of jail free cards. Sit down with your child and lay your plastic out on the table. Have an open discussion with them that it isn’t free money and that you are having to pay more for whatever item you just purchased on the card unless you pay it off that month. With inflation the way it is, it’s important for parents to go in depth when discussing interest and how it works with their child.

Tracking invisible money

Most kids just see their parents stick their debit or credit card into a machine and then they can walk out of the store with their purchases. They don’t understand the transaction behind the swipe. Parents can use their own debit or credit card accounts to show kids what goes on behind the scenes. Pull up your online account and talk to kids about the different columns on the card statement as well as the balances. Also, there’s no better way to teach kids these skills then to provide them with hands-on experience. Parents can research the debit cards that are available on the market for tweens and teens and set their child up with one to get used to “invisible money”.

Focus on needs, not wants

When it comes to learning to budget, recognizing “want it” versus “need it” can save anyone a lot of money. The earlier your kids understand the difference, the better they will be at saving money. Have them get into the practice of asking “want it or need it” before each purchase, even while family grocery shopping!

The co-founder & CEO of BusyKid, Gregg is a father of six, grandfather of two, certified financial planner and consultant who also became a leading advocate for sound parenting, child accountability and financial literacy. Gregg is considered a pillar of his Arizona community and has twice been named Chairman of “Smart Money Week” for the state of Arizona and was the 2014 National Financial Educators Council’s Financial Education Instructor of the Year.

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