Aug 19, 2021 / Money Tips
School is back in session (or will be soon), and there’s a distinct feeling of learning in the air (that also feels suspiciously like the end of summer). Your kids are equal parts nervous and excited, and ready or not, their brains are about to be filled with facts, figures, concepts, and many of the most important lessons of life. As you prepare for another year of learning, this is the perfect time to teach kids about money and give them practical financial lessons they can use in the real world.
The new school year brings a lot of expenses—books, fees, back-to-school clothes and supplies, etc. With all that your kids have to buy, this is a great chance to teach them the importance of making and living by a budget.
Sit down with your kids and write out all the expenses for the upcoming quarter. Separate them into categories (like the ones above), or create your own: clothes, fun, supplies, outings with friends, etc. Give your kids a set amount of money, or if they’re old enough, have them use their own. Then help them estimate the amount of money they’ll need for each category, always prioritizing the necessities first.
Invite your kids to keep their budget somewhere they’ll see it often, maybe even on their phones through a budgeting app. As they make purchases, remind your kids to check their budget first and update it often. This simple lesson in budgeting can help them establish a strong financial foundation for the rest of their lives.
The best companion to a student budget is a reliable source of income. If your kids are old enough, encourage them to find work outside of school, even if it’s a simple part-time job that doesn’t take much time away from their studies. Alternatively, you can give your kids opportunities to earn money at home by doing chores around the house.
Having income can teach your kids the value and concept of money—i.e. that it doesn’t come from their parents. Earning money also gives your kids the opportunity to manage it. Help them set up a bank account and establish savings goals. Show them how to separate their savings from their spending money. And, if they’re old enough, help them secure a credit card and debit card, and teach them the value and risk of compounding interest, as they save, make purchases, and pay off their balances.
Keep tabs on your kids accounts and monitor their spending, always reminding them to spend and save within the confines of their budget. The sooner they learn these valuable lessons about earning, saving, and spending, the better equipped they’ll be to manage their money and make smart financial decisions in the real world, including saving for college.
Your kids will learn money lessons by watching others and having conversations with their peers. Those lessons may as well come from you. Take some time to talk money with your kids. Tell them your story of learning to earn, save, and spend money wisely. Warn them about the financial pitfalls of life, including keeping up with the many Joneses in school and on social media, as well as the peace of mind that come with financial stability.
Talk to your kids about how you saved for college, for a car, for a home, and how you use your credit card and accounts to manage your money and save for the future. Review utility, cable, phone and other bills with your kids to give them an idea of how much life costs. Try to come up with ways you can save extra money as a family. Maybe that includes canceling a streaming service or eating out less often.
Aside from having an actual conversation, set a good example for your kids by showing them the importance of saving money. You can do this in simple ways, like reminding your kids to turn off lights or think twice before eating out or spending money on non-essentials. When they hear money lessons straight from their parents (whether face-to-face or through example), your kids are more likely to heed money warnings and follow the good examples you set.
Take advantage of this unique time of year—a time filled with opportunities to save, spend, and learn—to teach your kids the financial facts of life. It will prepare them for the school year ahead and give them a solid foundation to build on for the rest of their lives.