With financial lessons, start your kids early: Spending, saving habits can begin in preschool

Preschoolers can grasp what it means to save dimes. At a toy cash register, kids might exchange pretend coins for a plastic banana. Or will they? Often these days, kids watch parents slide a card for groceries or other goods. Do families still talk about how to save, spend and budget?

Teaching smart ways to track money should start when kids are young, before bad fiscal habits set in by young adulthood. There are many books and ideas for parents to share with kids, say local financial leaders who work with school-age children for fiscal literacy.

“There are financial concepts that are universal – like the spend, save, share concepts,” said Keith Appleton, STCU community development officer who talks about the topics in Spokane classes.

Earlier this year, STCU teamed up with students to promote smart money habits with a book about a spendthrift penguin, “Ping’s Pennies,” which the credit union’s employees gave out at schools.

“We talk about needs and wants in that book and understanding when we’re looking to purchase or save for something. Is it something we have to have or it would be nice to have,” Appleton said.

STCU has started a weekly virtual story time for reading kids books with sound fiscal themes such as the Berenstain Bears classic “Trouble With Money.”

Appleton said that book is a favorite because the characters go through the spend, save and share concepts. By the end, they learn the importance of saving for the unexpected.

At-home learning

Kids still can use a piggy bank and track what goes in for saving, spending and sharing. A child might get excited around sharing if it’s a goal such as buying cat food to donate to the animal shelter.

Appleton said middle school students can use fractions and tools to figure out the use of money earned or given as a gift.

“They can have a plan for it to save, spend or share, setting different goals,” he said. “If I’m going to save 30%, then for every $10, I’ll put $3 away to savings.

“If these habits take hold at an early age, they can be powerful as a young adult to have that mindset if your work gives a holiday bonus or for any unexpected windfalls.”

Some families are comfortable talking about priorities and goals and why they’re giving up certain things to accomplish others. Strategies might include kids earning money for working in the yard.

Younger kids can benefit from books that help them understand financial concepts. In addition to “Trouble With Money,” Appleton suggests “Money, Money, Honey Bunny!” by Marilyn Sadler and “Bunny Money” by Rosemary Wells.

Katie Scofield, a Numerica Credit Union financial education officer, has often taught sessions in area high schools. She uses the credit union’s program taught in three parts – budgeting, how to be smart with credit, and protections online and from fraud.

She also teaches around the spend, save and share concepts.

At home, games can make that fun. With daughters who are a freshman and sophomore at Ferris High School, her family often plays the card game Monopoly Deal.

“It’s fun, and really fast, and it teaches the basic concepts of Monopoly but in a condensed matter. You pay rent, and there’s the concept of building wealth through your properties.”

Another option is the Game of Life, which touches on life’s various expenses. Scofield said sometimes she and her husband have played a guessing game with their kids along the lines of “The Price Is Right” applied to the cost of a month’s groceries or home mortgage.

“If you ask, they might think we spend $300 a month on groceries, and then you can show them that, on average, we spend $600,” she said.

“Some of that shock factor is kind of good. My husband’s favorite is utilities. They used to be bad about not turning lights off, so one month we let them do whatever, then the next month we were strict about turning them off. We showed them the difference.”

Scofield also suggests talking with kids at least generally about a household budget for basic needs such as mortgage or rent, groceries, utilities and phone. “The things to keep your everyday going – gas for your car, insurance and all that stuff kids don’t think about.”

Basic money matters

Sarah Hysjulien, also with STCU, said she’s seen value in teaching money concepts early in a child’s life.

“Kids as young as 3 years old can understand the concept of exchanging value for something,” she said. “The younger they are when you start to talk to them about those concepts, the better it is. You don’t want to wait until they’re in high school to do that.”

Around savings, talk to kids about paying yourself first when money comes in, added Scofield. “That’s putting 20% of income back into your savings, but it’s right off the top,” she added. “This is your emergency fund, your rainy day fund.”

Then, a “share” amount can be 5% toward giving back to the community. “What we’ve done with our kids is they collected that 5%, and they pool it for six months, then they can take it to whatever charities they choose to donate it,” Scofield said.

There’s also some homework that can happen now to plan for the future, she added. Although schools are out, college scholarship applications aren’t put on hold.

“With my sophomore, she’s applying to or at least looking into scholarships each day. While students are home, they have time for writing scholarship essays. That would be an awesome thing to do to reduce overall student debt.”

Although people today use credit or debit cards most of the time, that isn’t necessarily the disconnect for kids to understand available cash. Checks were a precursor to cards.

“I can remember when I was in college, kids thought they had money because they had checks,” Hysjulien said. “You can talk about what money is actually there.”

Older elementary school children can understand the difference between credit and debit cards. For credit, “People forget it’s a loan,” she said, while “a debit card is linked to your bank account; that’s really your money.”

But people might overlook another factor. She tells high schoolers that if a debit card is used for even a few dollars over what’s in an account, the bank will cover it, but the cardholder is charged for that. A person needs to request that the financial institution shut off that option to cover an overdraft.

“I made that presentation to a high school group, and I later got a note from a student who thanked me and told me she turned off the ability for the bank to accept the charge that goes over.

“There is more to know about money than how to spend it. The earlier they can learn that, the more sound and stable they’ll be when they are older.”