Experts suggest that students lose more than two months-worth of knowledge over the summer break.
Many parents fill the downtime with outdoor activities and trips to keep kids busy and motivated. And, of course, there’s always that mandatory school reading list, designed to keep children engaged throughout the summer.
Teaching children about money is another great way to keep young minds sharp — and prepared for tomorrow’s responsibilities.
If you haven’t started these conversations, you can take advantage of the summer school break to get ideas moving. It’s never too early in children’s lives to start talking about money — in fact, the sooner the better.
Here are some ways you can get children involved in learning and understanding the value of finances:
Open a bank account
Helping your child establish their first account — a foundation of financial education — creates an opportunity to teach about savings, fees, and interest. Rather than just opening an account at your current bank, ask your kids to help you research finding the right bank.
One suggestion: Choose a bank with a nearby physical location where you can take your child. A special trip to a real branch to deposit money creates a memorable and rewarding experience for your children and can hugely reinforce your lessons.
Develop a savings plan
Saving money often comes as hard as earning it. Consider matching every dollar deposited to help give your children added incentive to build an account. Additionally, you might make saving a condition of their allowance and mutually agree on a percentage to save each month.
Teach about investing
Prospective retirees must now plan for 30+ years of retirement — and planning and saving for that can take even longer. Waiting for that first full-time job to start investing for retirement isn’t enough anymore.
If your kids are teens, discuss opening a custodial account or Roth IRA (if applicable). Doing so is a great opportunity to talk about taxes, investments, and compounding returns. For an initial investment, consider a broadly diversified, low-cost index fund.
For younger children, online games or websites can help teach basic investing concepts. Look into Warren Buffet’s Secret Millionaires Club, an online collection of cartoons, advice columns and games that teach lessons about money management. Other sites such as Mint.com also offer lists of excellent kids’ online resources that teach finance basics.
We don’t just save, spend, and invest money. Sometimes we choose to give it away. Have your children research charities on sites like CharityNavigator.org, America’s largest independent charity evaluator. In general, start talking about charitable giving and why it’s important. It can be a great way for kids to learn how their actions will impact others.
By taking these steps, you expose kids to the idea — and power — of money. Helping your children develop good financial habits early greatly benefits their entire future.