The COVID-19 pandemic ushered in a new era of economic uncertainty when millions of working Americans already felt like their finances were on shaky ground. Now, widespread unemployment and decreases in income for those still working hinder recovery, and some experts believe the worst is yet to come.
Hard times are ideal for teaching children the value of savings. When you have enough set-aside, you can weather harsh storms that leave others shipwrecked. Here’s why you should instill a nest egg-building mindset in your kids and tips for how to do so.
Why Now Is the Time to Teach about Saving
Currently, the U.S. job market features unemployment levels not seen since the Great Depression, and millions find themselves facing financial crises. Those who had a comfortable emergency fund can eke by, given the enhanced unemployment benefits under the CARES Act. Even with the generous, if temporary, provisions, a single unexpected expense, like a punctured tire, can mean the difference between having rent money and not.
You don’t ever want your children to find themselves in the situation where they have to decide between paying rent and buying food — or worse, facing eviction and homelessness. You would help them, but it’s wiser to teach them the skills they’ll need to avoid unnecessary hardships. Nothing will make them bulletproof, but knowledge is power.
Activities to Teach Kids about Savings
Now that you know how critical it is to use this time of economic uncertainty to instill financial lessons in your children, how do you do so? Here are eight activities to teach your little ones big money lessons.
Three Little Piggy Banks
You can start this activity when your baby is born, although they won’t understand it until they are toddlers. Give them three piggy banks. One piggy is for long-term savings — their college fund and eventual retirement. The second is for mid-term savings of one year, and the third is their play money that they may spend on what they like.
Whenever your child gets money for their birthday or accomplishes a task, help them divvy it up between the three piggies. When it comes time to spend the money that they saved for a year, show them how to make a pros and cons chart to guide their decision.
Opportunity cost refers to the concept that money is a finite resource, and if you spend it on one thing, that means you have less to spend on another. You can introduce this principle to your children by playing store with fake money. If they have $5, but they want to buy one item that costs $4 and another for $3, they have to decide which one they want the most.
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Going Grocery Shopping
Your real grocery errands can reinforce the idea of opportunity cost while teaching budgetary skills. One way to do so is by giving your kids a portion of the list and a budget amount. If they can find all items for less than the total they have to spend, let them use the rest for something they want, like a candy bar. Another idea involves allowing them to clip coupons and adding the amount they save to their allowance.
Do you pay your children the same amount weekly regardless of what they do? While this teaches them to spend what they have, it doesn’t build a connection between hard work and financial rewards. Instead, assign a dollar value to various chores and pay your kids when they complete them. You can use a chart on your refrigerator that they can check off as they complete tasks. That way, they know what their “paycheck” will be at weeks’ end.
Get Them a Debit Card
Many banks allow children to open accounts with a parent to cosign, and they can get a debit card. Doing so introduces them to real-life budgeting issues and responsible card use. You can decide if you want to make children accountable for overdraft fees or not — many institutions now give you the option to decline a purchase instead of receiving a penalty.
Stock Market Game
Many people shy away from the stock market because they fear the risk, but historically, investment is the best way to make your money work harder. You can play the stock market game as a family to overcome your trepidation. This activity also benefits you if you have a phobia about stocks and bonds.
Modified Game of Life
The Game of Life is an ideal way to teach children about how their decision making impacts their finances. If you want to take it a step further, you can modify some of the board spots and cards to make them more applicable to today’s world.
You can do a similar activity using Monopoly. Both games implement the element of chance, which unfortunately, does play a role in financial well-being. You could go a step further in teaching about systemic inequalities by awarding some players more cash and property to start — can anyone else catch up and win the game?
There Has Never Been a Better Time to Teach Kids About Savings
The current economic crisis spurred by the coronavirus pandemic is the perfect time to teach your kids about savings and money. Use the ideas above to make your children more financially savvy.
Jennifer Landis is the founder of Mindfulness Mama, a blog where she talks all things #momlife, marriage, mindfulness, and everything in between. A thirty-something mom of two, Jennifer spends her limited free time practicing yoga and pilates, sipping tea, and reading with her littles. You can find more from Jennifer on Twitter, @JenniferELandis.
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