By Teachers, For Teachers
It's never too early to teach children financial lessons and the necessary life skills of money management.
As a veteran finance professor and father of two young sons, I'd like to share my top 12 ways to teach good money habits to kids of all ages.
Wants & Needs with M&Ms
Using M&Ms, or popcorn, or juice boxes, explain to your children the difference between wants and needs. A need is something that is necessary for survival whereas a want is something that is nice to have but not necessary for survival. Ask them if they need M&Ms or just want them.
Cost & Benefits for Weekend Plans
Explain to your children how to make common decisions. Should they go to the park or play with toys? Playdate at home or at the park? Explain to them the costs and benefits of each alternative, and then give examples of decisions that they can make in the classroom. For example, ask them to list what they can do that weekend, and then help them arrive a decision.
Opportunity Costs with Snacks
Explain to your children the concept of opportunity costs. It is what you give up if you chose one alternative. So, if there are 4 alternatives, (say, eating pizza, mac and cheese, chicken nuggets, or spaghetti), opportunity cost is the cost of the next best alternative that you give up. In this case, if you hate eating spaghetti and chicken nuggets, and you select pizza, then your opportunity cost is the pleasure you give up by not eating mac and cheese.
Supply & Demand on the Bus
Remember that every moment with your child is a teachable moment. For example, when driving to field trips, show them the prices on gas stations and explain why they change so often. Explain the prices using concepts of demand and supply.
Grocery Store Budgeting
Ask parents to take their children grocery shopping. While in a store, ask parents to tell their children they need to buy a cereal box, or some item. Give them money and tell them to pick one and to do it wisely. If they can count money, ask them to complete the purchase transaction on their own.
Ask parents to discuss with their children what they did right and what they can do better next time.
Teach children the value of comparison shopping. Bring in ads from different stores. Tell students that they have X dollars to spend at these stores. Challenge them to get the most bang for their buck!
Add Coupons to the Curriculum
Tell children the benefits of using coupons. Give illustrations of how you used a coupon at Joanne’s or Michael’s or Target to buy school supplies. Show them the value of buying in bulk, shopping at garage sales and flea markets.
Bank Field Trip
Do a field trip to your local bank. They would welcome to have a class of children because that can mean future, life-long customers for them.
At the bank, have a manager show them how to open a savings account in their name and how to use an ATM card. Have the manager take them inside the vault. This is a great opportunity for the local bank to give away freebies to children (such as a plastic piggy bank).
Credit Card Pros & Cons
Ask children if they went out to eat last week. Ask them how their parents paid for their meal. Talk to them about pros and cons of using a credit card.
Risk / Reward Raffle
Teach your children about risk and return by raffling out a cookie or a pencil or other prize. Tell them that if they don’t buy a raffle ticket, they can’t win. And just because they bought a raffle ticket doesn’t guarantee them a reward or a prize. If you use raffles as a part of your behavior management plan, just add this explanation as an additional lesson when you're pulling raffle winners.
In life too, one needs to take a chance (or take risks) before getting a reward (or return). And just because you take risks does not mean you will get a return (or a reward). This principle applies to stocks and bonds and all kinds of investments, and this principle is sadly taught very late in life, in college!
Talk to children about identity theft and the importance of protecting personal information from strangers. For older students, you can open up a discussion on how they share their personal info, both online, on paper and with friends. Then, share tips on how to keep their info secure.
For young students, you can tap into "playing pretend" to illustrate this simply. If "Eric" breaks something in class and pretends that "Will" did it, explain how the real "Will" could be punished. This will make them understand the general concept and cost of identity theft. Then, explain how to prevent that by being careful with what personal information you share with other people.
Keeping Priorities Straight
Explain to your children that money is just a tool and they don’t need it to make them happy. It is a means to an end and not the ultimate goal in life. Money is not payment for love or a proxy for love. Money doesn’t guarantee happiness. Teach them the values associated with sharing, recycling and caring for others and the environment. Finally, have them develop a healthy relationship with money, otherwise money will control their lives instead of the other way around.
How do you teach finance lessons and other life skills in your classroom? Share in the comments section!
About the Author
Dr. Prakash Dheeriya is a Father, Author of “Finance for Kidz”, and a Professor of Finance at California State University-Dominguez Hills. He has been teaching finance and investments for over two decades. Dr. Dheeriya has several publications in the field of financial markets. A frequent speaker at conferences, chambers of commerce and rotary clubs, he has received several research awards, has over 30 refereed publications to his credit. Prakash takes particular pride in caring for and educating his two young boys, ages 7 and 8 years.
His children’s book series “Finance for Kidz” has been adopted by few school districts, and is available in print and ebook form. In addition, these books have been translated into Chinese, Arabic, French, Spanish, German, Portuguese, Korean, and Russian. More details about his books are available at http://www.finance4kidz.com
His motto in life is what he usually tells his kids: “Don’t worry. It’s going to be OK!”