Trying to have an extended conversation with your tween can be challenging, especially when the topic is considered bor-ing. "It's difficult to engage kids this age on the subject of money," says Janet Bodnar, editor of Kiplinger's magazine and author of Raising Money Smart Kids. "Their eyes glaze over."
So when Bodnar’s three kids were in middle school, she decided to teach them money lessons through games. One of her favorites was The Game of Life (before the game maker Hasbro replaced cash with credit cards), because kids picked up tidbits about college loans, insurance, disparate salaries, and the value of life experiences. The concepts kids learn from Life are sophisticated and important, such as the repercussions of spending more than you have, the benefits of long-term investing, and the economic demands of everyday life. While playing the game, the family talked about how going to college gives you more career choices and how passing up insurance could cost you a bundle.
Today, there are dozens of games, Web sites, and computer programs aimed at making money mavens out of middle schoolers. Mutual fund company T. Rowe Price teamed up with Disney to create The Great Piggy Bank Adventure, an online financial-planning game where players begin in Fiscalville, work toward goals of saving and diversifying, and end up in Fat City. ING Direct’s Planet Orange site teaches kids 6 to 12 about earning, spending, saving, and investing. As children reach their early teens, they might try Junior Achievement’s Money Might, a more sophisticated and challenging program that plunges into the key tenets of financial planning.
Junior Achievement also offers schools a 10-week curriculum on economics culminating in a day-long visit to a mobile “Finance Park” — an interactive miniature city where kids are assigned jobs and “roles” to balance a family’s financial needs and goals.
Cameron Fisher, 11, is one of 10 million students who’ve learned investing basics through the Foundation for Investor Education’s Stock Market Game. “Bonds are low risk, low reward. Mutual funds are moderate risk, moderate reward. Stocks are high risk, high reward,” the Kansas City boy wrote in an essay about how he’d invest his retirement money. The Stock Market Game, offered through schools, lets teams of kids try turning virtual $100,000 cash accounts into top-performing portfolios. If your child’s school doesn’t use this learning tool, you can download the teacher’s manual online and teach your kid yourself.
But teaching kids 10 to 14 about money isn’t all fun and games. At this age, allowances can be used to foster wise spending habits. Karyn Hodgens, co-founder of Kidnexions, which teaches money management to children, thinks parents ought to give their children allowances and let their kids use the cash to pay for things themselves. The reason: Money coming out of a parent’s pocket appears infinite. Kids need an introduction to the real world, where money is limited and must be managed.
Exactly how much allowance to give — and whether the cash should be contingent on doing chores — is debatable. But Hodgens says you should shift at least some of the discretionary money you now spend on your kids into an allowance. Explain to your kids that they can use the money to pay for things like movies or buying music on iTunes, but that when the money’s gone, it’s gone.
Hodgens, mother of two boys, believes kids should pay for their cell phone usage, too. Because cell phones are so important to them, they’re likely to keep their charges on track — and ensure you’re getting the best deal for your money. Kids can be fabulous bargain-hunters when they’re properly motivated.
Sure, kids this age will make mistakes, sometimes running out of snack money before they run out of week. Hodgens thinks that’s a good thing. “It’s through mistakes that you can really help them learn,” she says. “You get the opportunity to talk about how they might do things differently next time.” So don’t bail them out.
If the overspending means your son can’t afford the cell phone bill or something else too important to skip, give him an advance from next week’s allowance, but deduct that amount before he gets the rest.
Work for Goals
- Financial Literacy: What Your Kids Need to Know
- Video: What Kids Don't Know About Money
- Money Skills for Your Kids: Ages 4 to 9
- Money Skills for Your Kids: Ages 15 and Up
Because your kids should learn about working, too, keep the allowance modest enough so they’ll want to earn more. Tweens and early teens can babysit and do yard work for neighbors. But if you want to give your 10-year-old the ability to work for pay, employ her yourself by finding odd jobs around the home beyond the scope of normal chores. Set a fair rate of pay and realistic expectations for the work. If you want to educate your kids about pay scales in the working world, pay more for grueling jobs like weeding and less for cushy tasks they can do in front of the television.
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