During the COVID-19 pandemic, many parents are faced with the challenge of taking direct control of their kids’ education. More people are homeschooling than ever before, whether they intended to or not.

We know there are a lot of subjects to cover and things to think about, but this situation presents an opportunity to teach and instill good financial literacy fundamentals in your kids. We’ve found that personal finance is a subject best learned at home rather than in school anyway, so use this opportunity to give your kids a good foundation away from peer pressure and other societal influences that are out of your control.

The kinds of lessons that you’ll want to focus on will be broken into some broad categories: Earning Money, Spending Money, Saving Money, Borrowing Money, and Security. These categories will also vary depending on the age group of your kids.

Start at the Basics: What Money is and How you Earn it

This category includes what money is, how it is earned, jobs & employment.

Ages 4-8

• Explain what money is. Talk to your kids about what form money takes, how currency is different in different countries, and how exchanges work.
• For an exercise, you can work with kids in this age group on counting coins and converting pennies to nickels, nickels to dimes, and coins to paper money. If your kid doesn’t have a piggy bank yet, start one.
• Visit the US Mint’s web site for games for kids to have a fun way to understand more about currency (https://www.usmint.gov/learn/kids/games). You can also get educator resources for all grades from k-12 https://www.usmint.gov/learn/educators.
• Talk to your kids about how money is earned. We like to tie a child’s allowance to household chores, so they develop an early association between work and income that will serve them well later in life. Lots of important lessons will be learned here, like “you have to work before you can get paid.” It’s also important to reinforce that not all work will lead to a paycheck—some things you do for your family, for charity, or for yourself, and the benefits go beyond the purely financial.

Ages 9-14

• At this age group, talk more about the different kinds of jobs that are out there and what kind of incomes they generate.
• Your kids are probably old enough now to understand what you do for a living and what kinds of things you are expected to do to earn an income. You don’t have to share more than you’re comfortable with, but focus on basic things like how often you get paid, what kind of work schedule you have to keep, and how your job is different from other people’s.
• Ask your child to list any sources of income they can think of other than a paycheck. Talk to them about their list, and ways people bring in extra money. Whether it’s through a yard sale, a gift, or any other source, all income should be treated the same, so start reinforcing that lesson early.

Ages 15-18

• Now you can talk to your teen about choosing different jobs and finding the right career. Work with them to come up with a list of careers and jobs within that field (like healthcare might include doctors, nurses, insurance specialists, lab technicians, etc.) Visit mynextmove.org with them for ideas.
• They can start thinking now about a job as more than just a source of income. What kind of job do they imagine would be fulfilling in other ways besides the paycheck it brings?
• Point out to them that career satisfaction is a long-term goal, and most people will grow and change throughout their lifetime and end up in different jobs or positions over time.
• Besides employment, entrepreneurship is important for kids this age to understand. Help them understand that entrepreneurs who start businesses take extraordinary risks, and so earn more money if the business venture is successful.
• This is the age group where kids will need to begin to understand how the larger economy affects individual people’s jobs and income. Explain what recessions and depressions are, what social security is (and why they shouldn’t count on it for their own retirement someday).
• Finally, if they haven’t already, they’ll be working a job of their own soon. Talk about the kinds of jobs people their age are able to get, and what they might be interested in doing as a summer job or future career.
• A good introduction to economics is free online from the FEE (Foundation for Economic Education): https://courses.fee.org/courses/economics-in-one-day.
• Money Talks is great free online resources for kids age 14 and up: http://moneytalks.ucanr.edu.

Teach How to Spend Money Wisely

These lessons should focus on making wise choices when it comes to spending.

Ages 4-8

• It’s important to help a child understand the difference between “wants” and “needs”. Gather different items in the house and quiz your kids—is each item a want or a need?
• Start a special savings fund (at this age a coin jar or piggy bank) for a particular want. You can create a chart for the child to update as they save toward the goal.
• If they find an item at the store they want you to buy for them, make that a savings goal for them. Take a picture of the item along with the price, so they can update their chart or comparison shop online. By making them take the time to save, they’ll really have to think about how much they want the item, and how diligently they’re willing to save. And over time, they may find out there is something else they want even more—this is a great lesson for them to learn for themselves.

Ages 9-14

• Expand the “wants” vs “needs” conversation—discuss how one person’s want might be another person’s need. Also, discuss how you might need something like a car or pair of shoes, but you don’t need a sportscar or expensive name-brand shoes. It’s okay for kids to want things they don’t need, and even to have them sometimes, but they have to understand that they’ll need to save up to afford them.
• Introduce the concept of opportunity costs. This is when you make a trade-off, where you decide to buy one thing and not another because you can’t afford both. Say, if your child wants to spend $20 for an online video game, or they can buy tickets to see a movie. The monetary cost of the game might be $20, but the opportunity cost includes not being able to go to the movies.
• Make shopping lists and work with your child to identify trade-offs. Set a rigid budget and rank the items in order of importance, with needs at the top and wants at the bottom. If you run out of money for everything on the list, then the items at the bottom of the list won’t be included in the purchase.

Ages 15-18

• When talking about opportunity costs, now include the supply side as well. For example, if you earn $25 per hour, it might make sense to pay someone else $10 per hour to mow your lawn, even though you are capable of mowing your lawn yourself. This gets at the economic idea of specialization-each person focuses on what they are best and most productive at. This concept can help guide your child as they decide about college and what their future career might be.
• When talking about budget, expand this from shopping lists and savings goals to include a full projected income and spending plan. Talk about how one has to adjust a budget if the income is short of what was projected. Also talk about how the budget is impacted if extra money comes in. If everything is laid down in a written budget, extra money will more likely be put toward important savings goals than squandered.
• Set up a quiz for your child—show them various items and ask them what they think those items should cost. See if they have developed an innate sense of value or if they need to think more about how the economy works. For added perspective, talk about what those items cost when you were your kids’ age, and why and how those values have changed.
• When talking to kids at this age about spending, a major expense is coming up soon: college. Talk about how much they think college will cost, what they’d be comfortable borrowing, and how they might be able to afford an education. Check out https://www.consumerfinance.gov/consumer-tools/educator-tools/students/knowbeforeyouowe/ with them.
• Talk about housing expenses, and the difference between renting a home or apartment vs. buying.
• Car ownership will be a big topic for people this age—talk with them about the full costs of having a car, including gas, insurance, and maintenance.
• One important aspect of spending is charitable giving. Do they have this as an item on their budget? How much to they feel comfortable donating? Is volunteering time a better choice for them than monetary donations?

Emphasize the Importance of Saving Money

This category includes investing, saving for the future, and banking.

More Resources: How to Manage Your Savings Account Effectively

Ages 4-8

• Talk to your kids about how money is physically saved, whether in your piggy bank or a local bank branch. Point out a bank as you drive by one, and ask your child what they think happens in a bank.
• Create a piggy bank with your child, and let them decorate and store it themselves. Give them control over their savings and see how they handle it.
• Use your chart from the spending section to reinforce saving toward goals. Make your kids’ progress toward their goals regularly to help them visualize how saving is getting them closer to having the things they want.

Ages 9-14

• Those big spending goals you talked about with your child—college and their first car—should become savings goals. Talk about the best way to store the money and help it grow. Is it a good idea to upgrade from a piggy bank to a real savings account?
• Introduce the concept of “pay yourself first.” As income comes in, whether from monetary gifts, or odd jobs, make sure your child sets aside some fixed portion of that income for their established savings goals. They should do that first, before they have a chance to spend that money on impulse purchases.
• Start talking about an emergency savings fund. Talk about the reasons your child might need emergency savings in the future. Have them research the cost of car repairs, and discuss how long it might take your child to save up enough money for such a thing. They’ll see that it’s best that they start an emergency fund early.
• When you find a bank that will help you open a custodial account for your kids in this age group, ask for any educational materials they might offer. Any good bank will be glad to offer this, as they want to develop loyal, successful bank customers for life. Don’t forget to check out credit unions, as many of them have even better options for custodial accounts.

Ages 15-18

• While kids at this age have lots to save for their future, it’s time for them to be empowered to make decisions about what to do with their savings. Be sure anything they’re using their savings to buy is something they budgeted for in writing. People who write down their goals are much more likely to achieve them, so try to get your kids into the habit of recording their goals in writing now.

More Resources: Use Our Free Budgeting Calculator

• Talk about investing as a way to save. Explain stocks & bonds, and how investments with higher risk offer greater potential rewards, while low-risk investments earn less money over time. “Buy and hold” is the best investment strategy, and that’s especially true for young adults, who should have plenty of time for their investments to grow.
• Even without investing any money, have your child follow a stock. Pick a company they are aware of, and use an app or website to track the stock performance over time.
• Explain what mutual funds are, and how assets are “pooled” to make the overall investment less risky.
• After looking at all of the savings options, from bank accounts to CDs, mutual funds, or stocks & bonds, talk with your child about the best way for them to save their money and help them get that life-long savings vehicle established.
• Guide your teen to InlandEmpireSaves.org to take a pledge to save and get free tips & encouragement along the way.

Discuss the Process and Reasoning for Borrowing Money

Teach your kids about lending and borrowing; credit cards, loans, credit scoring, and student loan borrowing.

Ages 4-8

• If you can, take your kids to a library and check out a book. Talk to them about what happens if they don’t return the book on time.
• Ask your kids if they’ve loaned something to someone, like sharing a toy, book, or video game. Was their property returned to them? How did it make them feel if they didn’t get the item back? Were they worried the item would be damaged or lost?
• Compare these borrowing experiences to borrowing money. Explain how banks lend people money, and the people have to pay back the money.

Ages 9-14

• Expose your kids to the ins and outs of credit cards. They’ve probably seen plastic being swiped their whole lives, but they probably don’t understand that every credit card transaction is a small loan that must be repaid with interest.
• Explain interest, comparing the APR typical credit cards charge to the interest your kids’ savings account earns.
• Talk about carrying debt on credit cards from month to month, and how much it really costs. Use our credit card payoff calculator to show them how much more they’ll pay for purchases if they don’t pay off the balance right away.
• Do an exercise where you gather multiple credit card offers and compare them. Talk about the different costs and terms and why you might choose one card over another.

Ages 15-18

• Talk about how your child can avoid bad credit when they’re out on their own. Work with them on a strategy for building credit from nothing. Do they have enough savings for a secured card? Can you make them an authorized user on one of your accounts, and will their credit benefit from that?
• The potentially biggest borrowing decision of their lives is coming up. Will your teen be taking out student loans? Do they understand the full consequences of carrying that much debt?
• Help your child understand the concept of debt to income ratios, and how those are used by lenders.
• Talk about credit scoring. By now, your child should understand the credit report, and you can introduce credit scoring and how that score represents a borrower. Show them our “What Is A Good Credit Score?” infographic.

Navigate Them Through Account Security

This is a critical area of understanding for people of all ages, and you can’t start too young.

Ages 4-8

• If your children use electronic devices of any kind, talk to them about keeping their devices secure. This includes physically keeping them where they won’t be stolen, and securing them with passcodes. Any accounts they use for games or emails should be secured with good passwords that your kids will remember. Help them create a written backup of their passwords that can be store securely somewhere in case their accounts get locked.
• Make sure they understand that online purchases are no different from making purchases in a store, and that real money is being spent, even if it’s all done online. Teach them that credit cards are never to be used without your approval.
• Talk to your kids about what is appropriate information to share if they meet people online, whether through a game or social media. Help them understand how important privacy is for your personal and financial safety.

Ages 9-14

• Explore the concept of identity theft. Has your child heard of “catfishing” online? ID theft is catfishing for financial gain, to steal money by posing as another person online. Talk about how to protect your family from this crime when creating new accounts and protecting your personal data.
• Talk about what aliases your child uses when gaming or chatting online. Ask them if they think other people could figure out their real identities based on anything they’ve said.
• Show your child a phishing email (you’ve got some in your spam folder right now) and have them tell you anything they see that seems fishy to them. List all of the clues you can find that the email isn’t genuine and could lead to fraud or ID theft.
• Start talking about insurance, and how it protects you from financial risks. Your child will need auto insurance soon, so it’s not too early to introduce the idea.
• Create a new chore for your child—shredding documents. Any financial documents you intend to throw away should be shredded first. Make that your pre-teen’s job to help them understand how important it is to protect your personal financial information.

Ages 15-18

• Expand your discussion of online privacy to include reputation. What kind of image is your child presenting online? If a potential employer or college admissions counselor could see your child’s social media presence, would they want to hire them or admit them to their college?
• Besides phishing, talk about pharming, smishing, and vishing. Help your child understand that this kind of fraud is common, and that scammers are always updating their tactics to avoid being caught. Expand this to physical security, and explain “dumpster diving,” where thieves steal someone’s trash looking for financial records and information. This is why you’ve had your child doing the household shredding, not just to earn some allowance money.

Related Article: Important Tips to Minimize Credit & Identity Risk

• Talk about your child’s wallet or purse, and how they keep it secure. What would they do if it were lost or stolen? Do they have a plan? Have them inventory everything they carry with them, including numbers to call to cancel credit cards or order new ID cards, etc. Do the same inventory for their cell phones & etc. Do they have “find my” set up for their electronic devices? Are they sure they know all of their passwords and have them backed up somewhere?

Our focus is squarely on financial literacy. Help your kids know and understand the things they’ll need to be financially secure and ready for the future. You may hear a lot online about “financial capability”. This is a worthy topic, but includes things that are outside of your influence, like having financial means and access to financial services. Don’t ever let anyone tell your kids they are incapable of managing their money—literacy is the answer. Focus on the things that are under your and your kids’ control so you can help them develop the skills and knowledge they need.

It may seem overwhelming, all of the things you have to help your kids know to navigate their financial futures. We’re here to help! Visit our free online FIT Academy for courses and downloads that can help you better understand the topics you need to pass on to your children. And don’t forget, we have debt counselor standing by to answer questions and offer expert advice for achieving financial freedom.

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