Dad-approved ways to teach kids about money
It’s a dad thing.
You may be a man with a plan, but when it comes to putting your kids’ new toys together, how often do you read the instructions? Whether you’re assembling a dollhouse for the playroom or building a treehouse in the backyard, there’s a good chance the step-by-step directions will be tossed out the window from the moment you insert that first screw. After all, you’re Dad — you don’t need a how-to manual.
Of course, it’s no secret that having a formal plan in place can make all the difference along your financial journey. But do you know who else could use some guidance with understanding the basics on how to manage their money? Your child! In fact, 46% of people view their family as their biggest financial ally.1 Moreover, studies show that most individuals consider their dad to be their financial role model, and more than half credit Mr. Everything for helping them develop healthy savings skills.2
Don’t worry, though, Dad. If you’re looking to show your child the ropes, we’ve got you covered with some fun ideas.
Because you’re Dad of the Year every year, here are eight Dad-approved tips for teaching kids about all things money:
HOST GAME NIGHT
The average match of Monopoly can last anywhere from 20 minutes to three hours. That’s plenty of time for your child to learn a few valuable lessons on budgeting, purchasing and investing. Have them be the banker so they can start to grasp the concept of cash flow, debt and other real-world money matters.3
ACT AS THEIR FINANCIAL ADVISOR
Believe it not, research suggests that kids begin forming financial habits as early as age seven.4 Whenever your child has a question, no matter their age, try your best to provide them with honest answers. Let them pick your brain about everything from buying a home to earning a salary to preparing for retirement. Remember, as their go-to resource, you can help them build a strong foundation for their future.
RECOMMEND A SUMMER JOB
From babysitting to lifeguarding to refereeing, there are countless ways for your teen to make a quick buck while they’re off from school. Not only can landing a short-term gig in the neighborhood help them stay active during their break, but it can also educate them on the purpose of business and employment. Even better, they can experience what it’s like to get paid for working hard and being responsible.
These days, two-thirds of parents are giving their kids an average of $30 per week for completing common tasks and chores.5 If your child is still on the household payroll, why not maximize their regular allowance? Encourage them to divide their wages into three buckets — saving, spending and supporting. By following this simple strategy, they can allocate a little for now, a little for later and a little for charity.6
KEEP THEM INVOLVED
As a dad, you’re probably no stranger to telling your child that “money doesn’t grow on trees.” But it does seem to be everywhere when you’re out and about running errands in your community. So bring them with you and use each opportunity as a practice session. For example, let them fill the cart with items at the grocery store and discuss needs versus wants. See if they can calculate the tip when you’re at a restaurant. Invite them to go to the bank with you and explain withdrawals, deposits and fees.
The more your child engages with money, the better decisions they may make when balancing their own budget down the road.6
EMPLOY THE ENVELOPE SYSTEM
If your child receives a part-time income; collects an allowance; or piles up a large stash of cash from birthdays, holidays and other special occasions, the envelope method can help them prioritize their spending.7 How does it work? Simply put, grab a stack of envelopes and have your child write a specific label on each one, such as toys, movies, college funds or donations. Then, whenever they’re compensated, help them determine and designate a certain amount for each category. Of course, there are several mobile applications and online tools that mimic this old-school approach.
GIVE THEM “CREDIT”
Does your child have their eye on something trendy — and expensive? If they can’t wait and don’t have enough in their piggy bank, consider loaning the dollars, but require them to reimburse you with interest. In this scenario, you’re demonstrating how a product may end up costing more when put on a credit card.3
DO IT TOGETHER
Perhaps your child is saving up for something big, like a new cellphone, computer or car. Make it a team effort! Open a separate account with them and incentivize them by agreeing to match a fixed percentage of their input (based on what you can afford). For instance, if they’re setting aside $50 each month for the latest laptop, you could match it at 50% and contribute $25 to help them reach their goal.
Start saving today with an Empower Investment Account
1 Empower Retirement, “Financial Wellness: Exploring consumers’ definitions, milestones and barriers to financial wellbeing,” May 2021.
2 LendingTree, “Dads Are the No. 1 Source of Financial Advice, Survey Reveals,” June 2019.
3 Investopedia, “5 Lessons in Finance and Investing From Monopoly,” February 2021.
4 The Balance, “14 Ways to Teach Kids About Money,” March 2020.
5 The New York Times, “Average Weekly Allowance? It’s $30, a New Survey Finds,” October 2019.
6 NBC News, “How to teach young kids about money, so it sticks with them,” June 2019.
7 Nerd Wallet, “How to Budget Using The Envelope System,” December 2019.
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