Despite the western world’s recognition of the huge need to educate children about finances while they are in school, financial literacy and financial responsibility remain crucial subjects that are barely, if at all, taught in schools across the world. In Israel less than 20% of schools teach any kind of financial education. In the US, financial literacy camps are springing up to fill the gap as they recognize that summer is a great time to get the lessons across. But you can ‘home school’ and create your own financial literacy camp and turn the summer into a financially positive and educational experience.
In truth, a home school financial camp probably isn’t part of your kids’ (or grandkids’) plans … yet. At this point in the school year, the kids are viewing the upcoming break with great anticipation. But from our more mature vantage point we know that the novelty will wear off and as any mathematician will tell you … kids + boredom = often undesirable outcomes. The challenge is finding the right balance between their desire for freedom and flexibility and your need for them to act responsibly over the summer. Creating an informal curriculum will not only provide your kids with a good mix of freedom and discipline, but will give them an education that will literally set them up for life.
Your financial education program has two main elements – teaching the importance of earning money and how to spend it well. You, the parent or grandparent, may well have to invest, literally, in this program as you pay the child for jobs that that may not really need to be done, but as with every successful investment the dividends will make it worthwhile in the short and long term.
Money earned not given
From a very young age children are aware of money, but don’t understand its significance and potential. Many infants think that if you need cash you just go to the money machine in the wall, and it comes out automatically! They completely miss the point that it’s your hard-earned money that you are taking, not a gift you are being given, and that’s a lesson that you can teach them that will turn them one day into financially savvy adults.
The summer vacation is the perfect opportunity to ‘employ’ your children. Depending on your children’s ages and abilities you may have to pay them to do jobs that aren’t necessarily critical, so they get into the rhythm of earning money that they can then save and spend.
Plan and discuss with your children their hopes and expectations for their vacation and explain how they can be more financially independent by working part time. Some of your older children may have ‘proper’ jobs that will pay them, while younger children often will need to compensated from your “summer budget”.
So where do you start?
Gan and elementary school age children
Explain the job for which you will pay them, so they are very clear about what they have to do to get paid. These are very visual ages. If your young children have ‘piggy banks’ where they save coins – that’s great. But even better if they have a transparent container where they can see the coins actually mount up.
Once they have money they need to be taught age-appropriate financial responsibility. Studies show that from age three children are making assisted purchases (usually boxes of cereal) and from age six they begin to understand some of the significance and importance of money. So use trips to the supermarket (if you can handle that…) to help teach them financial awareness. Give them money to choose items that you need (not necessarily for themselves, but for the family). They will automatically want to buy certain products. Discuss the prices and show them how buying one item may mean not having enough money for something else.
Secondary school age group
Older children can do jobs that also help you in many ways and can save you money otherwise paid to outside contractors. Take, as just one example, the various phone and internet companies. We all know that calling around and comparing prices can ultimately save a significant amount of money, but many of us are too busy to spend all that time on the phone waiting for a human to answer. But that’s a great job for an older child. You may need to be near them at the time of the call as the company may need to confirm information with you, but the child can gather the information regarding the different rates and packages and help you decide on the best way forward. In addition to saving money you are giving them tools to develop their own financial awareness – another element of win-win.
Another potential time consuming and meaningful job is uploading photos. We all have albums at home containing photos from that pre-historic pre-digital age. After the recent fires in Israel many people remarked that if they had to evacuate their homes in a hurry they would want to take their photos. But if the photos are uploaded and stored safely in the ‘cloud’ they can be enjoyed in the tangible albums as well as digitally shared. For more physically inclined kids, garden work, home repairs, and house chores are all great ways to teach your kids about the value of money and give them some financial freedom. In addition to your satisfaction at paying your child rather than a workman, you will be boosting your children’s confidence and showing them how you value their skills.
These are just a few suggestions, but there are countless options that can be personalized to your lifestyle. If your children or grandchildren have smartphones you can show them budgeting apps so they can monitor their spending. They love being on screens, so let them do something productive while they are there! There are countless online resources to help educate children to grow into financially responsible adults, as well as books for children in Hebrew and English.
Children get their cues from their parents and grandparents. If you feel that financial literacy is an important issue, then approach it in an enthusiastic and positive way and your children will follow. School may be out for the summer but financial education is most definitely in. Enroll your children and you’ll be amazed at the results. Here’s to an educational, fun and fulfilling financial summer!
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