This is a guest article from John M. Box, Ph.D., the Senior Vice President of Education, JA Worldwide.
Could it be that Americans need a dose of the financial basics?
With the global economic crisis shedding light on the lack of knowledge that people have about money and how to manage money, it is critical that we view this crisis as a “teaching moment” for our children. At Junior Achievement, we teach children in grades K-12 about financial literacy and we offer you some ideas about how to help you begin the conversation at home.
Parents, here are five ways to begin the money conversation with your kids no matter what age they are:
1. Pack a lunch instead of buying at the school cafeteria and make that into a family cost-savings challenge. Have kids come up with ways to increase the cost efficiency of a brown bag lunch versus the school cafeteria. For example, instead of buying individual snack packs at the store, buy a larger package and have your kids help you separate out the servings into baggies. Then tally the amount of money you saved by doing this.
2. Buy store brands. Help your kids compare the ingredients lists of their favorite cereal with the store brand, showing them the similarities. Demonstrate to them that the difference in price is due to packaging and branding and not taste. (Perhaps host a taste-test to verify and track which store brands maintain or beat the quality of brand name products.)
3. Develop a reward system. The next toy your child requests, develop a reward system so that they can earn it. This brings new meaning to allowances where you and your kids can track effort against reward.
4. Be a smart shopper. Go through weekly catalogues and coupons with your kids to help you make your grocery lists for different markets. Explain why it’s good to purchase some items at certain stores and other items at other stores. For example, you can save $2 on a gallon milk by purchasing from a warehouse store.
5. Lead by example. Show your kids ways you’ve cut costs. Maybe you went from getting a $3.50 latte a day (that’s $17.50 per week or $70 per month) to bringing your own coffee to work. Then explain what you plan on doing with the savings. Help your kids figure out a similar item they can “trade down” for.
Trying just one of these suggestions can help your children become comfortable with money and asking questions about financial decisions. The sooner you begin the discussion and the practices, the sooner your kids can begin making wise financial decisions — you may be surprised at some of the ideas they have about saving money. There are probably many more examples of how to engage your family in the financial dialogue and they all need to be put into play sooner rather than later.
John Box is Senior Vice President of Education at JA Worldwide. Junior Achievement (JA) is the world’s largest organization dedicated to educating young people about business, economics, and free enterprise. JA programs are taught by volunteers in-class and after-school at locations throughout the United States and in 123 countries. To learn more about JA and its programs, or to locate the JA Area Office nearest you, logon to the JA Worldwide website at www.ja.org.
{ 7 comments… read them below or add one }
Great post! Nice tips.
We are constantly work at teaching our kids the value of money and to make smart choices!
A couple other tidbits for kids –
– Try to pay cash in front of them. Even though you can get cash back on credit cards for purchases, I want my kids to learn to use cash while they’re younger and only start relying on credit cards more heavily once they’re more established in their routines and into their long term spending/lifestyle phase.
– Something my father showed me as a kid was a graph with the power of compounding investing/interest. i.e. if you put 2000 per year into stocks returing 8% per year from 25-35 yrs old, you’d have more at retirement than someone who did so EVERY year starting at 35, etc.
Finally, while store vs. brand name is a good lesson, keep in mind that generic store brand cereal has a lower threshold for the amount of rat fecal matter that is allowed in the cereal. When they’re using the same source of supply, the brand name (flakes or whatever) come from the top of the hopper, whereas the generic comes from the bottom where the fecal pellets have a greater tendancy to settle. This sounds gross, but have heard in multiple venues from relavant industry sources.
The biggest thing, in my opinion, is to talk to them and get them to think about money. Things like saving for a big toy is good because it helps them experience how to get what they want, and that it isn’t just asking Mommy or the credit card fairy.
Darwin’s Finance: Great tips! I haven’t heard anything about fecal matter in cereal before, so I’ll leave that one alone…
Curious Cat: Very good tip. My plan is to try and involve our children about money issues from an early age. And of course start them blogging about money as soon as they can type.
I strongly believe that if people become more responsible about their actions (financial or otherwise) because of this recession – then this was well worth it.
About Darwin’s comment: Better yet, don’t buy cold cereal at all. If I were still eating breakfast cereal, and I’m not, I would get old-fashioned oatmeal instead. You get more for your dollar, and a lot less sugar (even if you add sweetener to oatmeal, YOU control how much). Even the “healthy” cereals are too much starch and puffed air for what they want you to pay. It is a racket and a half. I can’t believe WIC pays for that stuff and calls it nutritious. (And I’ve been on WIC.)
Dana: One can definitely save a lot of money at the grocery store just by making a few small changes here and there. The problem is that many people get into habits and don’t think about changing them. Hot vs. cold cereal is just one small example of this.