TOLEDO, Ohio — Learning how to manage money is an essential skill for life, but not everyone is equipped for it, which is why experts say we should be teaching our kids how to do it early on.
Financial educator Leigh Singleton with Monifi says there are two important concepts about money that we need to teach our kids.
"Making choices with a finite amount of money and that leads to, as they get older, tracking their spending and budgeting their money."
To begin with, Singleton suggests making your child's budgeting lesson fun so they stay engaged. For example, if you take them to the zoo, give them a certain amount of money, then let them choose how they're going to spend it.
"So if Sara wants to buy another stuffed unicorn and she already has 12, let her," says Singleton, "You've got to let her make that decision with the money, and if later she wishes she'd bought a t-shirt like her sister did, then she's learned from that decision."
Your kids will learn to be much more selective when they have a specific amount of money to spend. Plus, for kids, learning by doing is actually fun and it gives them some autonomy which most are craving.
Right now many grade schools don't teach true financial literacy and instead just focus on financial concepts, which means it's more important than ever for mom and dad to help navigate them through that first job and beyond.
"As parents, if we can find ways to give them the actual practice, then that prepares them for managing money for when they get their first job and a checking account in high school."
These days teens use digital currency like debit cards, PayPal and Apple Pay almost exclusively, so it's important to teach them where that digital money comes from.
"A lot of preteens might be using cash apps to send money to and from their friends, maybe splitting a bill for a meal or something," says Singleton, "but they need to graduate to a checking account because they're going to need that when they have a job and they're paying bills because it's difficult to track your expenses in a cash app."
They'll also need to learn how to adjust their budget accordingly over time and how to set both short-term & long-term financial goals. If all goes well, you'll set them on the path to being a well-balanced financially literate young adult.
Singleton says a common mistake we make is setting a budget that is not realistic, so she suggests setting realistic goals and making changes gradually if you want them to stick.