Furloughs, layoffs, stock market madness can shake the confidence of even the savviest saver in your world, not to mention the added stress of a pandemic (sigh…). And when you’re a parent, that stress can impact your kids, whether you’re aware of it or not. A study from the American Academy of Pediatrics found that the amount of debt a family has can negatively impact a child’s social and emotional well-being.
But it doesn’t have to be that way, at all. “While the current situation is stressful for everyone, and especially those with young children, this is an uncommon opportunity to teach your children valuable lessons — lessons about saving for what they want, budgeting for what they need, and facing challenges head on,” says Kavita Kamdar, head of financial health for youth and families at Chase. Here’s how to turn a financial woe into a life lesson for your kids.
Be honest with them. Kids, even little ones, know when something’s up. Keep their sense of security in mind but let them know — in an age-appropriate way — what’s going on, what you learned from it and what you might do differently or how you’re working through it. “Most of the time, what they can imagine is far worse than reality,” says Kamdar. “Positively highlight how your family is working together to navigate this by sharing easy-to-understand examples about daily life decisions or moments.” Be open and talk about it in a way that they can learn from it.
Share your successes. As you work through the money issue that is causing you stress, celebrate the wins with your kids so they understand how to overcome a loss and that it’s not forever. Getting kids involved in the process of managing your finances will make money a natural part of the conversation and, in turn, kids will gain confidence in their understanding of it.
Make money teachable in everyday moments. Most kids these days never have to actually use cash thanks to online ordering and credit cards. But that can make it harder to understand how money actually works. There are subtle ways though in which you can teach them during this crisis and beyond. “With all the shutdowns, most families are eating at home more than they may have before,” says Kamdar. “To help them further understand the reasons why they may need to eat at home more, involve them in the entire process from grocery shopping, deciding what to make, and helping to execute the meal plan. By involving them more in the whole process, it will make the idea of grocery shopping and preparing a meal more engaging and meaningful.”
Schools rarely teach kids about finances, which does them no favors down to road. While you’re homeschooling, here are a few ways to teach kids how to be smart with their savings:
- Start an allowance: An allowance teaches kids as young as 5 the value of money and how it relates to how hard you’ve worked to earn it. “Breakdown the process into steps; have your child identify what it is they want, how much the items cost, and what work they will need to do in order to save enough money to purchase the item,” says Kamdar. Once they’ve reached their goal, walk them through the process of buying their new favorite thing by using their savings, even if you do it online. Apps like GoalSetter, PiggyBot and Bankaroo act like virtual piggy banks to teach kids how to save. (Chase also offers a Real Talk With Kids About Money webcast for parents here.)
- Go old school with an actual piggy bank: Get creative and make learning about money fun. “Given the extra time your children have right now, make a project out of decorating a piggy bank and teaching them about why and how they can save money using them,” adds Kamdar. “As your child ages, you can transition them from a piggy bank to a three-jar method that allows them to categorize their money into savings, spending money, and funds to share.”
- Play the shopping game: Kids love to play grocery store or restaurant or anything where you have to buy a ticket. Use this opp as a chance to teach them about how much things cost, how much they have in their (play) wallet and whether or not they can afford that toy, food or train ticket.
How are you teaching your kids about money? Share any fun tips with us @BritandCo!