Following the recommendations of our elected and government officials to stay home and stay safe has provided the opportunity for many of us to spend more time with family. Whether it is going on walks, playing board games, watching movies, or simply just enjoying each other’s company, this crisis has provided the opportunity for each of us to slow down and reconnect with loved ones.
In the current crisis it is important to look for all the silver linings and treat them as opportunities to improve ourselves and those with whom we are getting to spend LOTS of time with. For those with children, this means helping them with school, keeping them active, limiting screen time, and attempting to provide normalcy in an abnormal time.
During this time teach your children the importance of good financial habits. An adult’s financial literacy is deeply tied to those of their parents. It is likely that your parents either taught you good habits, no habits, or bad habits and each of these has an impact on your view of money. Understanding the value of a dollar, how to budget, and compounding interest are important; especially as 7 out of 10 Americans admit to dealing with significant financial stress.
Here are some strategies to teach your children good financial habits and improve their financial literacy:
Provide your children an allowance or give them opportunities to earn “fun money” by completing chores, doing school work, or showing good behavior. Assign items such as screen time, snacks, sweets, activities, virtual hangouts, or other items a value that your children can “purchase.” This will help them learn to be selective with which amenities they would like to enjoy; as well as helping you get some things done around the house!
Make a Budget
Whether it is finances or time, a budget can help your children learn to prioritize their resources and meet their goals. Make it a game, provide them an amount they can allocate to their “basic necessities”: extracurriculars, back to school supplies, school dance tickets, prom or homecoming wear, and gas if they are old enough to drive. Tailor their “basic necessities” to their age.
If you are making a household budget yourself, think about including them in the conversation so they can understand that each dollar coming in has a purpose to support the family.
Playing board games with family is a favorite pastime for many and no game brings families together (or tears them apart) like Monopoly! You start with an amount that you have to strategically use to buy properties and budget for when you land on a property owned by others. You can collect a dividend from a stock maturing or benefit from a bank error to increase your cash, but can also get hit with a luxury tax or have to pay for insurance. These are real-life experiences that you can teach your children while spending quality time together. If they are too young for monopoly try: Life or Cash Flow for Kids.
Make them Spend Some of Their Own Money
Things are tight right now for many individuals and giving your children a few bucks to rent an On-Demand movie or buy something they want is lower on the priority scale. However, if they still have money from the tooth fairy, birthday gifts, graduation, or from a past job, encourage them to spend those funds. Making it a point for your children to use their own money to purchase items so they can determine how much value they really place on the item they want. If they are old enough, encourage them to get a job when life returns to normal. Babysitting, assistant coaching, tutoring, or lifeguarding are a few great ways for children to earn income.
Create a Model Investment Portfolio
Create an account on Stocks, an app iPhones or https://www.howthemarketworks.com. You and your children can determine what amount you will start with, what you will buy, and then track it over the course of time. These applications make it easy to learn about investing! It is a fun way to teach them about the importance of saving for the long-term and do it in a safe way.
Each of these will help you instill a culture of financial wellness and good financial habits into your children. Many of our advisors have children of their own and understand family dynamics. TCG is a family resource and is available to you and your grown children if they have questions during this financial shock. Schedule a TeleWealth Virtual Meeting with our advisors to review your family’s financial goals and what you can do to improve your financial health.