Go online to raise money-savvy kids

This post from Doug Lebda is part of the reader stories series. Doug is a personal finance expert, father of three, founder and chairman of Lending Tree, the Lending Tree Foundation and co-founder of Tykoon . Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income.

According to the “Teens and Personal Finance” survey conducted by Junior Achievement USA/All State Foundation, only 56 percent of teens believe that they will be financially well-off or better off than their parents. This represents a 37 percent drop from 2011 and a serious lack of money-management confidence among the youth population. Of teens surveyed, 86 percent indicated that their parents were their source for money-management education.

What can parents do to help make millennials more confident in their ability to manage finances?

My life mission has been to advocate for consumers and support financial literacy, but when it came time for me to teach my young daughters about these concepts, I realized that speaking to kids about money was drastically different from helping impart that education to adults. I tried everything from chore charts to visual reward cues like bags of money, but I just couldn't capture their interest.

I eventually saw that in my children's world, virtual engagement was the key to holding their attention and making something fun. I took the conversation online, mimicking the virtual gaming experience by tying their chores to online reward notifications via email and online chore charts and letting them track their balances online. Then we supported this with real-life family activities and tactics to reinforce their lessons they were learning and pass on the family values around money we wanted them to learn.

As we started taking an inventory of their personal earning, saving, giving, and spending, money management started becoming fun. Slowly my daughters began to take ownership of their money decisions. They were excited to earn, proud to save, happy to give, and appreciative when they spent.

Here are five tips I've compiled to help other parents get their kids thinking about money by melding online and real-world tactics:

  1. Make learning virtual and fun. In an annual survey by T. Rowe Price, 85 percent of kids say that an online game would be helpful for them to learn more about the basics of money. With today's digitally savvy kids, it's important to meet kids where they are already–online. That said, it is also crucial to create fun earning activities in real life on top of everyday chores to make earning fun. Spend a summer day with your kids creating a lemonade stand make it into a game. Dedicate a rainy afternoon to arts and crafts for sale at your next community fundraiser. Bake cookies together for a bake sale. Let your creativity run free!
  2. Change “I want!” to “How do I earn?” Parenting is tough, and it gets much tougher when kids don't get what they want. Instead of saying “no” or “yes” during the next demand-driven fit, try diverting your child to think about what they can do to earn the things they want. Then explain how they can do this by helping out around the house so they start developing a strong work ethic. It's helpful to track balances online so kids can get a sense of their progress and stay motivated.
  3. See like a bird but save like a squirrel. Encourage kids to take a bird's-eye view of the money they have coming in like allowance, rewards for tasks accomplished or birthday gifts. Parents and kids can determine the portions of income they will automatically put towards saving, giving and spending. This helps your kids develop healthy patterns and plans around money that they can carry with them as they get older. Again, tracking balances online can help kids have tangible reminders of their goals and overall financial situation.
  4. Be consistent about expectations and rewards. Make sure your kids know what they're expected to do before they get their allowance. Be consistent in rewarding a job well done as well as withholding rewards if they don't fulfill their responsibilities. Online task management tools or chore charts can be especially helpful for both parents and kids to track completed tasks and be held accountable to their commitments.
  5. It takes a village, so get it involved. Inform extended family and friends about your mission and get them involved! Work together to teach and encourage your kids to save and get rewarded for achieving milestones. Consider having family match their savings for birthdays or treat kids to non-cash rewards like a special family outing for good financial planning.

I know that the money conversation can be a tough one, but throughout my years at Lending Tree I have seen how absolutely crucial understanding the basics of money management is to long-term financial health. By instilling money smarts in our kids today, we are setting the foundation for generations of money-smart families to come.

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LeRainDrop
LeRainDrop

This makes so much sense: “it’s important to meet kids where they are already—online.” Very innovative thinking and smart tips! Thanks!

Luna Jaffe
Luna Jaffe

Yes! Great article. And I just want to add that my favorite book for helping parents teach their children well is “Raising Financially Fit Kids” by Joline Godfrey.

Stephanie @ The Empowered Dollar
Stephanie @ The Empowered Dollar

Couldn’t agree more about being consistent. Nothing can be more frustrating for a child.

I’d emphasize to start early and for goodness sakes, make it fun 🙂

AS
AS

This is a good post, and I think that the suggested tips and tools are great, but I have a problem with the assumption that the 37% drop represents “a serious lack of money-management confidence”. As a millennial myself, I would say that most of my peers and I have doubts about our financial future due to the state of the economy, the cost of college, and job security. Most of my friends have watched parents get laid off or have to switch careers unexpectedly. Furthermore, we’re all extremely aware of the cost of education and the lack of jobs… Read more »

talfonso
talfonso

Great way to teach kids about money! I hope those approaches can help them understand the aspects of personal finance, such as the difference between needs and wants; saving, spending, and giving, and so forth.

Babs
Babs

Does this work if they are 23? 🙁

Emily
Emily

Wow. Have things really gotten so dire at GRS that the “Reader Stories” are now just excuses for veiled advertising?

Alison Wiley
Alison Wiley

I see it differently than Emily. Maybe I’m unusually ad-insensitive, but I didn’t even notice I was being pitched.

I think this post is excellent, despite having no kids of my own. My favorite part: “They were excited to earn, proud to save, happy to give, and appreciative when they spent.”

I’d love to see more adults (not just kids) be like that. It’s the same type of values I cultivate in my own life and my own blog.

Ted
Ted

There are multiple sites that provide a service like this, many of which have been around for years. It’s not a new idea. That said, it’s always good to have competition. Tykoon joins ThreeJars, Famzoo, and others. One important thing to keep in mind when using any of these services is their business model. How each site generates revenues will affect how they approach issues and how they interact with you and your kids. Some sites charge monthly or annual fees. Others leverage the referral incentives from major online retailers or financial companies. Whichever website you choose to manage your… Read more »

Kelly@Financial-Lessons

I always wished my parents did more to teach me about finances and money management. I think it is a great idea to do things online so kids are actually interested and want to do it, rather than being told by their parents what they should or have to do. I like that you say “Turn ‘I want’ into ‘how can i earn’ ” because any parent is surely aware of how often kids say “i want”. Great ideas!

Seth
Seth

You nailed it! I work at a credit union, and we encourage savings at a young age. I wish that more people would take on child savings more rather than giving their kids everything they want. I saved up my money at a young age and I remember I wanted to buy a Game Boy. It took me about a year, but I bought it myself…and it was that much more rewarding! Nice work!

Sena Cobb
Sena Cobb

Fun! I like the car with the baby over the wheel! Lol!

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