The kids are back in classes, and the learning is off to a good start (right?). Between the math homework, pop quizzes and history lessons that just don’t stick, it’s easy to forget about some of the lifelong money lessons your kids have right in front of them at home. Not sure where to start? We’ll give you a headstart with five fun ones!
Money lesson #1: You’ll have to make decisions with your money.
This one’s easy for grownups because we make decisions all the time. But kids are still learning the ropes of decision-making. Start small. Explain why you choose to spend money on groceries instead of takeout. Or clue them in on why you chose to buy one car over another. Eventually, they’ll start making tradeoffs on their own.
Show, don’t tell: Get your kids a Greenlight login and send them money for spending and saving. The next time they ask you to buy something at the store, tell them they have a choice to make in their Greenlight app!
Money lesson #2: Money comes from hard work.
The earlier kids can understand this, the better. Psst, we’ve got an idea. Set them up with chores and choose whether or not an allowance works for your family. Believe it or not, pulling out the vacuum or washing the car actually helps your kids become more responsible. Just ask Marty Rossman, who researched the impact of household chores at a young age. She found the “best predictor of young adults’ success” was their involvement in household chores at a young age.
Make chores fun: Turn on some music and come up with a fun name for your kids’ chores in your Greenlight app.
Money lesson #3: Compound growth helps you grow your money.
Ever heard of the marshmallow experiment? You know — one marshmallow now or two marshmallows later? Your kids can learn about compound growth in simple terms like this. If you save and invest at a young age (even if that means spending less in the short term), it’ll pay off in the long run. Big time.
Incentivize your kids: Pay your kids an interest rate on their savings. Setting Parent-Paid Interest lets you decide how much you want to give, from 0-100%. The average rate for Greenlight parents is 18%. Start here and raise it as they save more. Spoiler alert — they will.
Money lesson #4: You are your own money managing boss.
One day, your kids will be budgeting, saving for their dream car and making big decisions with their money… OR they can get started right now. To get them in the habit, encourage them to put money toward savings goals or try Greenlight’s Round Ups to send extra cents into savings. They’ll get the hang of it — and yes, they’ll get that dream car much sooner if they start young!
Let them take the reigns: When they’re managing their money, they might have a hiccup every now and then. That’s okay! They’re learning while they have you to coach them. Talk about those hiccups and learn from them together.
Money lesson #5: Money doesn’t grow on trees (but really!)
Okay, let’s be real. How many times have you told your kids that money doesn’t grow on trees? It’s one thing to say it, but for them to learn it, they’ll need to see it in action. When they’re constantly borrowing money from you (especially cash), they don’t have a full grasp on spending and saving. To them, it’s just their parent’s bank account — which may seem endless.
Get the ball rolling: Give them their own debit card (a la Greenlight) with money set aside for different expenses: restaurants, gas only, general spending, you name it!
That’s a wrap! Now you know how to make chores fun, get a debit card for your kids and set an interest rate to incentivize saving habits. And hey, these aren’t just money lessons for kids — you might even learn a thing or two about managing your money!
XBOX, PlayStation, Nintendo, Twitch. If you’re a parent, you’ve probably heard your kids talking the gamer talk along with their favorite games like Madden, Fortnite, Mario Kart and Minecraft. 75% of Americans have at least one gamer in the house, so we’re not surprised by the wave of Greenlight families sharing their gaming experiences with us.
Whether your kids prefer mobile gaming or they kick it old school with Nintendo, video games can quickly become a favorite pastime… and a recurring cost. On average, parents spent $433 on video games PER YEAR! We don’t see that number going down any time soon, so let’s turn it into a money lesson instead.
Knowledge is power
With so many different consoles and video games on the market, teaching young gamers to do their research develops smart habits that will stick with them well into their adult years
Here are a few questions to get the conversation started:
- How much does each gaming console and individual game cost?
- What are the differences between each video game platform and what makes them special?
- Which games interest them the most? Which platform is the right fit?
One of our Greenlight moms, Natalie Y., says her three kids (ages 14, 16 and 18) make great decisions for their individual gaming interests.
“My kids each have different gaming preferences. One loves his Switch and Xbox. One loves his PS4 and Xbox. One loves her Wii U. They all love the 3DS. They’ve saved up for their machines, done their research and figured out which games are on which platforms. They get a set amount of money each week for jobs completed around the house — and they save up for the games they want.”
Read the fine print
Since video games often feature in-game purchases for accessories or level boosts, you have a good opportunity to teach your kids about the fine print. By linking a Greenlight card to these in-game add-ons, kids can see miscellaneous charges that often pop up.
“My kids have the cards attached to their XBOX, PC and phone accounts. It’s so much better than having my card attached and them accidentally buying stuff. Plus, it teaches them to be careful with things like recurring charges or hidden fees. They are much more careful about what they buy now,” shared another Greenlight mom, Alysson B.
Level up with a gaming budget
Because the gaming industry is so fast-paced, new trends can keep prices steep. Use this as an opportunity to talk about a magical thing called budgeting. Tell your kids that without saving or budgeting, they might not be able to afford the latest game or console.
With Greenlight, parents can limit how much their kids spend on games, which keeps eager gamers from going overboard. Ohio mom Heather Renee Gilbert shared the secret to her game-loving son’s success.
“My son uses his Greenlight card for Xbox games. I created an Online Gaming greenlight for him where I put money specifically toward his gaming expenses. He earns money for his grades and his behavior. Having the greenlight specific for gaming is amazing because otherwise, he would blow through all the money I gave him.”
A little talking goes a long way
Raising financially-smart kids sometimes means getting crafty with teaching opportunities. The more relevant the topic, the more engaging the conversation can be. If your kids are into video games, why not start money talks around one of their favorite things?
Greenlight can help
Not sold just yet? Sign up for Greenlight and see for yourself!
You’ve made it to the finish line. After diplomas, passed tests and signed acceptance letters, it’s finally starting to feel real.
If you’re scrambling at the last minute to send your kids off with all the knowledge and tips they need for the real world, take a breather. We have a step-by-step guide for raising financially-smart high school graduates.
No matter what financial background they have or career path they choose, there are some basics that every high school senior should know before college.
- Credit vs. debit. Once they’re 18, they can get their own credit card. Here’s the thing: they have to be able to prove their independent income or have a co-signer (probably you!). Talk about credit vs. debit to decide if this is the right time for them.
- Everything costs money. Teach your kids how to budget and monitor their spending regularly so they don’t find themselves in a bad situation.
- Wants vs. needs. For some kids, this is the first time they’ll be paying for gas on their own. For others, college loans are about to start piling up. Take this as a teaching moment to explain why needs should always come before wants.
Return on investment
Whether they’re picking a major or starting their own business, an important lesson is return on investment. Start with something like, “What you do now affects what you do later. If you decide to push off your mandatory classes, you may wind up in college longer than you wanted to.” You can also use a calculator to figure out the ROI for a major or minor .
Keep communication open
Just because they’re leaving home doesn’t mean they’re all alone — remind them of this. They have you and they have us. Setting the stage for strong communication is really important!
Let Greenlight help
Family finance, big decisions, money management… it’s kinda our thing. They may not be right down the hallway from you anymore, but you can use your app to stay connected and keep up the financial learnings.
Or, send them a nice Greenlight Gift to let them know you’re thinking of them. With all of this help, they can handle anything that comes their way!
You did it. You celebrated the birthdays, packed lunches for soccer tournaments and survived the endless conversation about Minecraft. Congratulations, Moms and Dads — you’ve made it through 2019.
As we look toward 2020, allow us to celebrate the unsung heroes of financial literacy – YOU! The hundreds of thousands of Greenlight parents teaching their kids the value of a dollar and the art of making smart trade-off decisions.
In 2019, Greenlight kids did 1.8 million chores and collectively managed more than $150 million. But that’s not all.
Looking toward 2020
In 2020, we’ve got big plans to improve the Greenlight app and add more features for your kids to learn the full-spectrum of money management.
We’ll be weaving more educational layers into the Greenlight app, making it fun (and painless!) for kids to build smart earning, spending, saving and giving habits.
Our team is also building tools for kids to learn all about the world of investing, with a new suite of features that allow kids to invest in multiple funds and even buy fractional shares from their favorite companies.
Our single most important job is to support you – the parents doing the hard work. Together, let’s make 2020 the Year of Financial Literacy.
*Data captured from Greenlight families based on activity from Dec 2018 to Nov 2019. Average monthly spend calculated only for kids who spent.
Julie Lythcott-Haimes, author of How to Raise an Adult, gave a TED Talk in 2015 about setting the right priorities for your kids. She quoted the Harvard Grant Study (only the longest longitudinal study ever conducted) which concluded “professional success in life comes from having done chores as a kid.”
We think chores are important too, which is why we launched a set of chores features in the Greenlight app in February of this year. Since then, we’ve actually had Greenlight families tell us that their kids have asked for MORE chores after instituting a routine.
When is the right time to start chores?
All families are different, and all kids are different. A chores routine can start as early as “getting clothes to the laundry basket” in preschool years.
Back-to-school season is a great time to talk about getting back into routines, and asking your kids for input on what tasks need to be done. Another great time is birthdays, recognizing that with age comes new responsibilities.
Which chores do I choose?
Of all Greenlight families, the five most popular chores are:
Clean your bedroom is the most popular chore for all ages. Read is popular for younger kids, under the age of 10. Take out the trash heats up for children over 12 years of age. And wash the dishes is most popular around 15-17.
Some other personal favorites from the editor: pick up after yourself, scoop the dog poop and be nice to your brother. “No cussing” has also been a fan favorite around the Greenlight office. A special shout out to the parents writing their chores in ALL CAPS. But we digress…
On average, Greenlight families institute 4.41 chores per child, and recurring chores are by far more popular than one-time.
Here’s a helpful guide from the moms of Sunshine and Hurricanes with kid-friendly chores from preschool through 10 years of age.
Do I pay my kids for chores?
A recent T. Rowe Price survey on parents, kids and money saw that 51% of parents give their kids allowance, but the kids have to earn it.
Ron Lieber, author of Greenlight staff favorite The Opposite of Spoiled, advises not to give allowances in exchange for chores. He says, “Allowances ought to stand on its own, not as a wage but as a teaching tool.”
Chores teach accountability and responsibility. Allowances tangibly teach the practices of budgeting and saving. (More on allowances over the coming weeks.)
There are experts and Greenlight families, on both sides of the fence of this debate. We encourage each family to make decisions based on what will work best for them.
- You may institute a chore schedule that includes standard tasks (like cleaning up bedrooms, doing laundry or walking the dog), and incentivizes more high-value tasks with monetary rewards on a less-frequent basis.
- You might consider an allowance to be regular payment for jobs well done. If the clothes are piled up on the desk instead of on the floor, little Sophia’s room still isn’t “clean” to mom’s golden standard.
- You can tie chore completion to allowances. If the trash isn’t taken out, floor isn’t vacuumed and the dog poop isn’t scooped, you won’t get your allowance this week.
Whatever your chore routine, Greenlight can help you stick to it
With features like flexible scheduling and linking chore completion to allowance, Greenlight has helped thousands of families implement a routine.
Set chores that repeat weekly, or multiple times a week.
Or set one-time chores for bigger tasks like spring cleaning, babysitting or mowing the lawn.
Kids review and check off their chores as complete.
Review the chore schedule and manage scheduled payouts.
Don’t have Greenlight yet?
Many self-employed parents have no idea that it’s absolutely legal—and a great tax move—to hire their own kids to work in their companies. Better yet, it’s a great way to help your kids develop a work ethic, teach them some basic work skills and encourage them to work for their spending money.
As kids’ year-end report cards start coming home, many parents are considering this question: “Is it a good idea to pay our kids for doing well at school?”
Dave Ramsey is an American financial author, radio host, television personality, and motivational speaker focused on encouraging good money management skills for all ages. But, he didn’t start out this way.
Dave made plenty of money when he was young, but poor money management decisions resulted in significant debt. As a result, he lost everything he saved and was embarrassed to ask for help. Dave was determined to figure out how money works and to better manage his situation. He read every book available, interviewed older wealthy individuals, and more. Ultimately, he realized that the world wasn’t out to get him. As it turns out, it was his own decisions that ruined him financially.
After moving back into real estate and bailing himself out of financial distress, Dave realized he wanted to help others with all the knowledge he had gained. He began Ramsey Solutions in 1992 to “counsel folks hurting from the results of financial stress.” Dave wrote several books on the subject and eventually started a radio call-in show that airs nationally.
As you can imagine, Dave has several tips for your kids to learn early. Check out just a few of these below!
Elementary School Age
- Use a clear jar for saving. There are a lot of piggy banks that are pretty cool looking! Try to find one that is also clear so your child can see their money growing. This should be a fun thing for you and your child to sit down and discuss. Watching three quarters turn into 8 quarters is a big deal! This will also encourage saving.
- Show them that stuff costs money. It’s one thing to have money and another to understand what it actually means. The next time you take your child to the store, have them bring some physical money with them from their piggy bank. When they find something they want to purchase, have them hand their money to the cashier. This will be far more meaningful than a simple lecture about money because they will visually witness the result.
- Teach them opportunity cost. Your kids need to learn that when they decide to purchase something, it generally means they can’t purchase something else. So, if they want to purchase a video game, show them that they won’t have enough money to pay for the new pair of shoes they want as well. Tradeoffs are critical, and can easily be taught in this manner.
- The importance of giving. Once your kids start making or saving money, take time to discuss the importance of giving to others in need. If they are passionate about animals for example, help them pick a shelter they can either give money or time to help out. Your kids will see that giving helps others, but that they will also feel good about it as well.
- Work for money. Your children will have a lot of free time during breaks, summers, and more. Helping them find a summer job at their local ice cream shop for example is a great way to show how working will provide them the additional money they seek.
- Teach them the danger of credit cards. As soon as your teen turns 18, they are going to want a credit card and will receive mail from banks trying to provide it to them with “attractive” promotions. Teach them why debt is dangerous and how to protect themselves.
These are just a few of the tips you can use to teach your kids how to manage their money. Its best to start as early as possible promoting positive money management skills because it will be a critical asset for your kids as they grow up.
First and foremost, when you’re shopping for back to school supplies, make sure you know what you have. Go through your kids’ rooms and take inventory of their clothing and any supplies they might have laying around. Clean out old backpacks and school bags. Take stock of supplies in your home office, in your kitchen drawers, in the hall closet. This way, you won’t continue to buy a protractor every year when you have a forgotten pile of them tucked away somewhere in your house.
Once you have a list of what you already have, you’ll be more focused on what you need. Using your inventory list, create a new list of items your kids absolutely need for the upcoming school year. Make copies of your finalized need list and give them to everyone in your family. If you and your family are tech-savvy, consider creating a shared google doc, or something of the like, so that you and your children can edit it together. This way, there should be no confusion on what’s been purchased and what you still need to buy.
Start buying early and plan your time
Planning ahead is really the best way to save money on back to school shopping. If you start looking at supplies and prices early, you’ll be better equipped to recognize and take advantage of the best sale prices.
Also, if you make a plan ahead of time, deciding which stores you and your kids will need to visit to get their supplies, you can track those stores easily by subscribing to their Facebook pages or Twitter feeds. Often, stores will post reminders of sales or even surprise offers to their subscribers. Following these stores early and often will help you get the most for your money.
Another benefit to starting your shopping early is the option of shopping online. Many times, you can find great deals shopping on Amazon, Overstock, even eBay or Craigslist. And, some stores offer online specific sales with better deals than you can find in store. So, don’t wait until the last week of summer to scramble and get your kids their supplies! Give yourself time to browse the internet too, and leave plenty of time for the great deals you find to be shipped to you.
Shop Tax Free Weekend and End of Summer Sales (but beware…)
Shopping on tax free weekend and during end of summer sales can be great ways to save money on back to school supplies. Parents should absolutely be aware of when tax free shopping occurs, and they should keep track of when their (and their kids’) favorite stores hold their end of summer sales.
However, it’s also a good idea to be critical of these seemingly fabulous sales. I worked at Old Navy throughout my high school and college years, so I have firsthand knowledge of some of the sneakier sides to summer sales. For example, sometimes stores will mark their prices up to full value during tax-free weekends, and other stores will actually run better sales before and after the big advertised “summer sale.” So be wary of the sales you see, and take the extra time to determine whether you’re getting the best deal. Don’t be fooled by the “tax-free” excitement of saving 7% on a shirt that costs $25 when it will be 50% off during next week’s less advertised sale.
Avoid unnecessaries and compromise with your kids
Fancy pencil pouches? Your kid has a backpack… that’s a pencil pouch right there. Cute, trendy, or graphic covered binders that cost 4x the amount of a regular, plain, binder? Who needs it? Chances are, your kid is going to either stuff some papers in there to keep for later, draw on it with markers or pens, or never take it out of his/her locker. Cutting down on the unnecessary items your kid wants but doesn’t need is a surefire way to save money.
But, if your son really wants the expensive backpack with a built in organizer, a hard-case pocket for his laptop, and a cool design on the front, compromise with him. If your daughter will not stop asking for the Vera Wang lunch bag she saw online the other day, compromise with her. Strike up a deal that they have to pay the difference between the backpack or lunch bag you want to buy for them and the one they want. They could cover this difference using saved up holiday money, allowance money, or by doing extra chores.
Be wary of teacher required lists
This last tip is a little variable, but here’s a secret from someone who’s taught high school for the past 5 years: Take our “required” school supply lists with a grain of salt. Again, this is the experience of just one teacher, but honestly, sometimes we don’t even know what our students will need for the entire year. My best advice is to buy the basics: pens, pencils, paper. Your child will always need something to write with and something to write on, but hold off on any excess- colored pencils, glue sticks, a binder for each class, rulers, etc.- until you know exactly what they’ll be using on a day-to-day basis
The way I see it, there are three main options for giving your kids an allowance.
Option One: Give them an automatic allowance. With automatic allowances, parents will usually set a standard amount of money for their kids to receive, weekly, bi-monthly, or monthly, and their child will receive that money no matter what (for the most part, of course).
Option Two: Don’t give your kids any allowance at all: self-explanatory.
Option Three: Have your kids earn an allowance. Many parents use this option and assign certain tasks or chores to their child, which upon completion, will result in a rewarded allowance. Of course, you’ll find pros and cons of any decision you make as a parent, including the decision about allowances. However, out of these three main options, I think there is a clear, front-runner that is beneficial for both parents and children.
Through the course of my life, and my more recent research and inquiries into this topic, I have been exposed to numerous variations of the allowance situation. Two stories stuck with me, though, as extreme, yet surprisingly realistic examples of the negative consequences of giving your kids an automated allowance or not giving them an allowance at all.
Extreme Scenario #1: The Jean-Ralphio and Mona-Lisa Saperstein Story
Parks and Recreation is a sit-com that recently went off the air in 2015. It follows the quirky and endearing Parks and Rec. department of Pawnee, Indiana through the trials, tribulations, and triumphs of life. While most of the characters are lovable and good-hearted people at their core, there are two characters, Mona-Lisa and Jean-Ralphio Saperstein, who should serve as a warning to any parent considering the automatic allowance option. Mona-Lisa and Jean-Ralphio come from a rich family, headed by a father who clearly does not regulate the money they receive. It is quite evident that, in their fictional lives, they’ve probably never heard the word “no” before as a response to any request, thus resulting in their annoying and outrageous request of “Money please!” This demand is made often, without remorse, and almost rarely without an affirmative answer from their father. They are so used to receiving money whenever they want, automatically and without any effort, that they perfectly illustrate an extreme consequence of giving your kids an automatic, no-strings-attached allowance.
While this is obviously an extreme example, taken from a fictional TV show, there is some real truth that lies at the core of Mona-Lisa and Jean-Ralphio’s roles. If you don’t require any effort from your children in order for them to receive their allowance, then what’s to stop them from taking it for granted? What lesson will they learn about how to get money? Will they turn out like Mon- Lisa and Jean-Ralphio, assuming that all they need to do in order to get money is sit around and wait for it, and then if it’s not enough, just whine until they get more? Do you, as a parent, really want to hear “Money please!” all the time, even after you’ve already given your child money? I don’t think so.
Extreme Scenario #2: No Allowance: The Story of Put-Back Pancakes
My aunt and uncle adhere to a much different philosophy than that of fictional father, Dr. Saperstein, from Parks and Rec. They didn’t believe in giving their kids an allowance at all. So, my cousin, let’s call him Jim, had to figure out another way to get money. As many teenagers do, Jim turned to the job force and got a part-time job as a carhop at Sonic. He worked at Sonic all 4 years of high school, and in this time, he learned to budget and save his money since he knew his parents weren’t going to be his main source of income. So far, so good, right?
In almost every way, my cousin is a perfect example of how not giving your kids an allowance is a good option. He learned the value of hard work. He didn’t bother his parents for money all the time. He had a good head on his shoulders and was able to understand the basic principle of saving money, which is advanced for a teenager. However, there are two things wrong with this story. Number one, my cousin is an anomaly. He represents a small population of teenagers who are stable and level-headed enough to make these responsible decisions, like finding and maintaining a job and saving the money he made at this job. Other teens may not be as dedicated as he was to earning and saving money during those carefree, teenage years.
The second thing wrong with my cousin’s story is the end. Jim managed to save more money during his high school years than I think most high schoolers could even comprehend. But, this resulted in him being extremely stingy with his money, to a fault. Perfect example: his honeymoon. After my cousin got married, he and his wife vacationed in Mexico for their honeymoon. One morning, at breakfast, Jim piled his plate high with food from the buffet, taking full advantage of an “all you can eat” meal. However, before he went to sit down to his feast, he was stopped by the cashier at the end of the line who told him that breakfast was not actually included in his room rate and that he’d need to shell out a rather hefty sum for his overloaded plate. My cousin, the too-money conscious man that he’d become, looked at the cashier, turned around, and dumped his food back in each, individual serving pan from which he’d taken it just minutes before.
The moral of Jim’s story is this: not giving your kids an allowance might be a good idea. They might find a job, work hard for their money, and learn valuable lessons about managing their own finances. Or, they might end up like my cousin, dumping pancakes and scrambled eggs back into hot plates in Mexico, effectively embarrassing himself and his new wife on what should’ve been a lovely honeymoon.
So, what do you do as a parent then? Ultimately, the decision is up to you and what you think is best for your family. However, considering the pros and cons of each side, setting up a system for your kids to earn their allowance seems like the best, least painful, and most beneficial way to go. By having to earn their allowance, kids will hopefully learn the lesson of working for what they get. Ideally, they’d value their money more because they had to work for it, thereby making them more conscious about spending and saving. And finally, the system of working for their money at home will mirror their future, independent lives when they have to work for their paychecks and balance their adult finances. Exposing your kids now to the realities of money management and working to earn their money is an invaluable experience, and you can easily start by implementing an earned allowance policy in your house today!
(photo courtesy © Carissa Rogers cc2.0)