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Howdy. I'd like to expand upon my 7 yr old's financial literacy. So far she has a savings acct. & receives a weekly allowance. It's $7 for doing chores & she's required to put $1 in her savings acct. & $1 towards a charity of her choice. So she has $5 weekly pocket money & buys her what-nots w/ this. I allow her to borrow a few bucks from me if a purchase is a few bucks abover her liquid cash. I think this is quasi-valuable--so she knows she needs to pay back ppl/debts. She pays w/ cash & so is learning how to handle money & calculate tax & change.

 

I'm looking for the next step in expanding her financial knowledge & skill base. I've thought of including her on budgeting household bills but I'm not sure if that's too much at this age. I'd like to get her investing in stocks & we may go through a few simple steps in order to determine which company shares to buy. She also discusses funds as a group in her Girl Scout troop.

 

In terms of books & discussions, topics include needs vs. wants, donating, money denominations, etc., & trade-offs. While she's still only 7 I truly believe in developing financial literacy early in life. Are there any other ideas you have? Fianances are everywhere & so I may be overlooking an obvious source of skill-building. Please give input!

Edited by Earthmerlin
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Financial literacy is one of those skills that is built slowly over time.  My only advice would be to keep it real, with real, sustainable goals. Right now she's putting away 30% of her income, which is good, but is it feasible long term?  And does it neglect anything?  We have 4 categories here: save, spend, invest, and donate.  Save is for short term goals, invest is for adulthood.  Spend goes in the wallet, donate goes in a jar so that when he sees a charity he's interested in, he can support it.  Right now his picks are Wounded Warrior Project, Salvation Army, and the local food bank.

 

We have a long progression of skills that are built up.  The first is learning restraint and self control.  I don't tell him where his money goes, only that *some* must go in each category.  That gives him a little bit of flexibility but still builds the habits I want him to have.  Next year or so, he'll start writing down his purchases from "spend" in a little bank book.  I want him to be conscious of where his money goes and see the habits he's developing so he can hone them.  At the same time, the "save" and "donate" jars begin earning  interest because the money is sitting there.  He gets notebooks with checkbook paper in them to record transactions so he always knows what he has.
Then we move to lump sums.  He'll start being in charge of various big purchases, like basic school supplies, and work his way up to more important things. I can give him in cash the same budget I would have spent and let him manage it.  He has to buy everything on the list, but again, there is flexibility.  This skill came in handy when my oldest started taking turns in scouts doing the grocery shopping for campouts.  He usually came in under budget and they still had plenty of food and really good meals. :)

 

My 7yo is currently enamoured with the Moneytopia game.  It's free online, but it's rather long and not meant for kids.  You play as one of 8 adults and have to do everything from decide where to live, how much to invest, save for retirement, all the way through dealing with life's hiccups.  It takes forever (I have it running in the background right now, and it's his third day with this current game) but it's more realistic than the game of Life.  I would like to get another copy of Allowance, a board game, but that will probably wait for a while.

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Financial literacy is one of those skills that is built slowly over time. My only advice would be to keep it real, with real, sustainable goals. Right now she's putting away 30% of her income, which is good, but is it feasible long term? And does it neglect anything? We have 4 categories here: save, spend, invest, and donate. Save is for short term goals, invest is for adulthood. Spend goes in the wallet, donate goes in a jar so that when he sees a charity he's interested in, he can support it. Right now his picks are Wounded Warrior Project, Salvation Army, and the local food bank.

 

We have a long progression of skills that are built up. The first is learning restraint and self control. I don't tell him where his money goes, only that *some* must go in each category. That gives him a little bit of flexibility but still builds the habits I want him to have. Next year or so, he'll start writing down his purchases from "spend" in a little bank book. I want him to be conscious of where his money goes and see the habits he's developing so he can hone them. At the same time, the "save" and "donate" jars begin earning interest because the money is sitting there. He gets notebooks with checkbook paper in them to record transactions so he always knows what he has.

Then we move to lump sums. He'll start being in charge of various big purchases, like basic school supplies, and work his way up to more important things. I can give him in cash the same budget I would have spent and let him manage it. He has to buy everything on the list, but again, there is flexibility. This skill came in handy when my oldest started taking turns in scouts doing the grocery shopping for campouts. He usually came in under budget and they still had plenty of food and really good meals. :)

 

My 7yo is currently enamoured with the Moneytopia game. It's free online, but it's rather long and not meant for kids. You play as one of 8 adults and have to do everything from decide where to live, how much to invest, save for retirement, all the way through dealing with life's hiccups. It takes forever (I have it running in the background right now, and it's his third day with this current game) but it's more realistic than the game of Life. I would like to get another copy of Allowance, a board game, but that will probably wait for a while.

Thanks for sharing. I like the idea of her budgeting school supplies & I believe that's a next natural step this August when it's time to gather such things. Perhaps the same can be done with new school clothes? Hmmm, I'll need to think that over. I will look into both the online & board games you mentioned. Where did you get the notebook with checkbook papers? That sounds like something I'd be interested in.

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My dd loves the Cashflow for Kids board game and keeps her own books for her egg business.

I shall look into this game--we are board game fans so this one may naturally fold into the mix! She & a friend plan on a lenonade stand this summer, which will be a good opportunity to manage funds (but may only be a 1 time source of them--we shall see).

 

She's asked to have a yard sale & I just may indulge her. It not only can get rid of clutter but help her determine what should go, how to set prices, barter, make change, & manage profits. My wheels are now turning!

 

I like the idea of this egg business. We have toyed around with the idea of getting backyard chickens. That's still a far off plan though. But it has me thinking what micro-business a little kid can delve into.....hmmm, food for thought!

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My dd loves the Cashflow for Kids board game and keeps her own books for her egg business.

If it's not prying too much, how did she set up & now run her business? How did you folks initially handle advertising---drumming up business? I REALLY like this idea!

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You don't have to use her money to do all the teaching.

 

Talk about family budget. Talk about insurance. Talk about giving. Talk about long term savings and your savings for things like college and retirement. When an appliance or something breaks, get your child involved in looking at review with you on what you should buy next, comparison shopping, purchasing and even watch you haggle if you can make a deal.

 

A LOT is learned by watching the parent's habits - good or bad. 

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You don't have to use her money to do all the teaching.

 

Talk about family budget. Talk about insurance. Talk about giving. Talk about long term savings and your savings for things like college and retirement. When an appliance or something breaks, get your child involved in looking at review with you on what you should buy next, comparison shopping, purchasing and even watch you haggle if you can make a deal.

 

A LOT is learned by watching the parent's habits - good or bad. 

 

This, definitely!

 

Our kids are pretty informed about our financial situation.  We have an open budget and explain what we're saving for, how we invest, why we keep some categories low or refuse to spend money on X...they're pretty comfortable with our decision when we say no to something, but we also sometimes use their interest to help them put together a spending plan. "Oh, you really think we should do that, eh?  It's not currently in the budget, but here's the spreadsheet.  See if you can create a budget that will include X and we'll talk about it."

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Thanks for sharing. I like the idea of her budgeting school supplies & I believe that's a next natural step this August when it's time to gather such things. Perhaps the same can be done with new school clothes? Hmmm, I'll need to think that over. I will look into both the online & board games you mentioned. Where did you get the notebook with checkbook papers? That sounds like something I'd be interested in.

 

My oldest started doing bigger school items in jr high/ high school, including clothes, classes, books.  Oh, my, the year he ended up buying a book 3 times because he refused to listen to his teacher's instructions....well, let's say the lesson hammered home when he had to dip into his savings to cover his shortfall. ;)  But better in high school than in college away from home. :)

 

I made the sheets in excel.  A strip of grey, a strip of white, with columns for date, withdrawal, deposit, and balance.  I'm sure if you want premade an office supply store would have books.

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You don't have to use her money to do all the teaching.

 

Talk about family budget. Talk about insurance. Talk about giving. Talk about long term savings and your savings for things like college and retirement. When an appliance or something breaks, get your child involved in looking at review with you on what you should buy next, comparison shopping, purchasing and even watch you haggle if you can make a deal.

 

A LOT is learned by watching the parent's habits - good or bad.

Yes, thanks for this. I should have mentioned our discussions on college, etc. I like the idea of getting her involved in family purchases & comparison shopping. I also like having her get involved in grocery shopping as this happens regularly & can reinforce learning. Thanks for the tips!

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If it's not prying too much, how did she set up & now run her business? How did you folks initially handle advertising---drumming up business? I REALLY like this idea!

 

Her uncle bought her chickens and the coop for Christmas one year. 

 

Advertising isn't much of an issue when you only have four layers. When she had too many to sell to family, she went door to door until she ran out. When she runs out of food, she takes her wheelbarrow a few streets away to the stockfeed shop and hauls it back.

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Her uncle bought her chickens and the coop for Christmas one year.

 

Advertising isn't much of an issue when you only have four layers. When she had too many to sell to family, she went door to door until she ran out. When she runs out of food, she takes her wheelbarrow a few streets away to the stockfeed shop and hauls it back.

Thanks for the reply!

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I used an envelope system with my kids starting at around this age. They had saving, tithing, gifts for others, AWANA dues (later became youth group money), and spending. The envelope system helped them see right away that they couldn't just spend everything--they had some needs that they needed to budget their money for. It also meant we had a lot of practice making change to be able to divide things into envelopes. 

 

Have fun with it!

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