Tips and Tools to Help Kids Master Money
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What are your favorite strategies for teaching kids about money? In addition to piggy banks and lemonade stands, consider trying some of these tools and ideas. Each will help kids get familiar with money management and how money works.
Get your kids started with the basics by introducing them to coins and dollars. Afterward, let kids know that instead of using dollars and coins, sometimes people pay for things with debit and credit cards, digital wallets, or checks, each of which is attached to an account where the dollars and coins live. The account holds the money, and the forms of payment (debit and credit cards, digital wallets, and checks) are used to take money from the account and give it to a person or business.
Guidelines for writing a check
Show kids how to write a check and give them some interesting background info on the history of checks (at the link). For more details about how checks work, have kids take a look at this check example and explanation.
Find age-specific worksheets and guidance, along with money-focused books to read together.
It can be helpful for kids to have a big-picture approach to money, and these widely accepted types of budgets can help them prioritize what’s important.
This rule states that for most adults, it’s helpful to put 50% of their money (after taxes) toward needs, 30% toward wants, and 20% toward saving or paying down debt. Since kids have fewer needs that they have to pay for out of pocket, change this a bit to something like 30/30/40 so kids can get a head start on savings. And with high school kids, consider sharing this simulation of how the rule works in practice. Be sure first that kids understand the difference between needs (things that are necessary, like food, clothing, and shelter) and wants (things that are desired, like more expensive clothing or a special toy). This is also a great time to introduce them to the idea of delayed gratification.
The idea behind a zero-based budget is that every dollar someone earns should be earmarked for something: saving, spending, sharing, or investing. While this video is geared toward adults and older teens, it helps explain the concept and provides wording you can use with your kids.
Much like a zero-based budget, an envelope budget encourages kids to put all their money into designated categories—and in this case, their money goes into separate labeled envelopes so they can quickly see how much they have at a given time. We recommend initially creating envelopes for saving, spending, and sharing. When kids get a bit older or if you open a Stash custodial account (available with a $9/month Stash subscription plan on Stash Invest), add an envelope for investing.
Financial education at school
Do your kids learn about money at school? Talk to their teachers and ask if they use Stash101 (yes, it’s free!). Let them know it’s a classroom economy and behavior management system that teaches kids about money with simulated banking and investing—and it integrates well with any grade or subject.
More financial education at home
Encourage your kids to learn more—and practice what they learn—with Stash101 at home.
This is a UGMA /UTMA account. The money in a custodial account is the property of the minor. This type of account is a Non-discretionary managed account and is only offered through Stash Investments LLC (“Stash RIA”).