T is going to turn 11 soon so I thought it would be fun to run a test to see how well we are doing in growing a rich kid. But how do you check if you are making good progress in teaching your child about money?
As a way to benchmark our efforts, I turned to Money As You Grow, a site developed by the President’s Advisory Council on Financial Capability. This impressive sounding group – which includes one of my favorite personal finance experts, Beth Kobliner – has identified 20 essential, age-appropriate financial lessons that kids need to know as they grow.
There are four milestones for 6 – 10 year olds:
You need to make choices about how you spend your money.
Yay! We’ve definitely got this one covered. Thanks to giving T an allowance (since he was 5 years old) and using FamZoo as our online allowance tracker, T has been making decisions about how to spend his money for several years now. In fact, he’s gotten this concept so well that he’s even started trying to “help” Z and me make choices about how we spend our money!
It’s good to shop around and compare prices before you buy.
Hmm, interesting, not sure if we have been doing this. T has definitely caught on to the idea of researching reviews about products, but we haven’t done a lot of price comparison. He has learned to look out for things on sale, though, when we are grocery shopping and it looks like that counts towards this.
It can be costly and dangerous to share information online.
T recently told me “Mom! You’ve taught me everything I need to know! You’ve got to stop controlling me!” This was in response to me saying that he could not go on a public server of a multiplayer online game. T is a persistent kid so his pleas to be allowed to do this continued over several days until I finally said “Would you feel comfortable going alone to a party with college students?” He looked horrified and shook his head. “Well, that’s what this would be like. You would be with adults and we don’t know who those adults are.” Case closed.
T is in that in-between stage when he has the innocence of a child but the tween’s desire to get out there and explore the world. While we are doing a lot of the activities suggested on Money As You Grow for this milestone, we have not sat down and talked about never giving out personal information on a computer. It’s well past time for this particular talk by the sounds of it.
Putting your money in a savings account will protect it and pay you interest.
Well this is tricky. Tom has his money with The Bank of Mom & Dad. It’s incredibly safe and pays the highest rate of interest anywhere! The problem with this lesson is that the interest rates on bank savings accounts are pitifully low right now. It’s hard enough for me to feel motivated by them let alone a child of T’s age. I think I’ll say that we’ve achieved half of this lesson as we have taught T about interest on your savings.
So, how did we do? I’m giving us only 50%. This is a tad depressing considering we’re focused on finances as a family. But it’s a useful exercise to see where we can improve and a timely reminder that not everything about financial literacy can be taught with an allowance.
How are you doing at teaching these lessons to your kids?