Help Young Children Form Positive Financial Habits

parent and daughter putting coins into piggy bankGuest blogger and Iowa State University Extension and Outreach Human Sciences Specialist in Family Finance, Sandra McKinnon shares some compelling information on youth and financial literacy.

Children form financial habits at an early age. Parents and care providers can influence what those habits will be. University of Wisconsin-Madison researcher Karen Holden and colleagues found that habits children learn when they are young form the basis for their future behavior. A study from Cambridge University found that children form financial habits by age 7. We may teach our children that a dime is thin and worth 10 cents, but developing financial habits includes more than just recognizing coins. Parents and care providers can help children gain the knowledge and skills they need to develop positive financial habits.

The Consumer Financial Protection Bureau suggests teaching preschoolers these basic concepts:
You need money to buy things.
You earn money by working.
You may have to wait before you can buy something you want.
There is a difference between things that you want and things that you need.
Other concepts to establish good financial habits include learning about numbers, time and institutions, such as stores, banks or credit unions, and employers. Children also can learn about budgeting, regular saving and shopping strategies; social values, such as gifts, generosity and sense of community; and public goods like the library.

Teaching children about financial responsibility at an early age can have long-term benefits. As they grow older and start to manage their own money, they will have a better understanding of the value of money and the importance of good financial habits. It can also consider help with debt collectors avoid falling into debt and facing the consequences of unpaid debts. If you’re struggling with debt and are dealing with harassing calls from debt collectors, there are resources available to help. Consider reaching out to a professional debt relief service that can help you understand your options and work towards a solution that can alleviate your financial burden.

Another way to engage with children is by reading money-related books with children, and providing hands-on learning opportunities. Check out the following titles at your local library:

Sheep in a Shop by Nancy Shaw
The Berenstain Bears Think of Those in Need by Stan and Jan Berenstain
Just a Piggy Bank by Mercer Mayer
Just Saving My Money by Mercer Mayer
A Chair for My Mother by Vera B. Williams

The goal is to help children become comfortable with basic tools of how and why financial choices are made. For example, we can encourage pretend play, like a grocery store. Or we can explore careers by playing dress-up or acting out stories. In addition, we can talk about whether spending money on entertainment, for example, is a need or a want.

ISU Extension and Outreach human sciences specialists in family finance offer Preschoolers and Pennies: Read, Talk, Learn and Play, a 2-hour training for child care providers. Providers practice a way of reading with children that gives children an opportunity to become storytellers of books with a money theme. This introduces and reinforces money-related words and concepts in a more meaningful way. Complementary activities throughout the day encourage preschoolers to practice money skills.

Visit the Extension Store for the Allowance Game. Playing this game starts a great discussion on choices and consequences.

Barb Dunn Swanson

With two earned degrees from Iowa State University, Barb is a Human Sciences Specialist utilizing her experience working alongside communities to develop strong youth and families! With humor and compassion, she enjoys teaching, listening and learning to learn!

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The Language of Money

Parents reading a book with their daughterAs we continue our conversation with Human Sciences Family Finance Specialist Mary Weinand, she reminds us how important financial literacy is and even recommends a few children’s books.

I believe financial literacy is like any other language and like any other language we need to hear it often to understand it. Young children learn best by observing and mimicking adults. Our children may not understand the concept of credit, money, or savings but they are very good observers and they learn from us. This process is called financial socialization and research by the Consumer Financial Protection Bureau indicates that children form personal financial habits as early as preschool and these attitudes often carry into adulthood.

So how can we help our children learn appropriate financial behaviors?

Young children may not know anything about banks, credit cards, or money. But, they are very good observers. They have constant exposure to their parents and a desire to mimic their behavior, or the behaviors of the community around them. Research by the Consumer Financial Protection Bureau and others indicate that the personal traits, habits, and behaviors that lead to financial well-being in adulthood start to form as early as preschool.

Children as young as three begin to demonstrate self-regulations, persistence, and focus. They can use these qualities when using and managing limited resources like time, money, treats, or belongings. They have begun to develop basic values and attitudes around saving, consuming and early numeracy skills.

Parents are often the biggest and most positive influence of the financial socialization of their children. They can help their children by providing opportunities to learn and interact with money. Children learn important money lessons simply by watching parents earn, spend, save, share and borrow. Have children create shopping lists and help them to comparison shop and select grocery items. Include children in family financial decisions, planning, and saving for goals such as vacation and college education. And, model positive financial behaviors during everyday routines, such as comparing prices and products, and sticking to a shopping list. You don’t have to have a lot of money, in fact children often learn best when choices are limited and they can observe the difference between needs and wants.

Another method to introduce children to the topic of money is through books. It is often easier to be more objective when talking about book characters and their money decisions. After families talk about what the characters could do, adopting some of the same financial concepts into their own lives is easier too.

And, parents do not need to be money experts. Many of the building blocks for good financial decision making—like patience, planning, and problem-solving—do not require a lot of financial know-how. Some good book choices are; The Berenstain Bears’ Trouble With Money, (Stan & Jan Berenstain), or A Bargain for Frances, (Russell Hoban). These books help express important financial topics such as problem solving, savings, earnings, and self-control.  A great resource for families and libraries is the Money as You Grow Book Club guide which provides several family activities and more reading suggestions.

To learn more about family finance information, contact any ISU Extension and Outreach county office to be connected with a human sciences specialist in family finance.

Barb Dunn Swanson

With two earned degrees from Iowa State University, Barb is a Human Sciences Specialist utilizing her experience working alongside communities to develop strong youth and families! With humor and compassion, she enjoys teaching, listening and learning to learn!

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Keep it Fiscally Healthy this Holiday Season

 Guest blogger Mary Weinand, Human Sciences Specialist, shares some important helpful ideas for fiscal health this holiday season.

parent and daughter putting coins into piggy bank

Each year at Holiday season we are flooded with articles and advice on how to “stay healthy” with all the choices we have and the opportunities to overindulge. Well, the advice we hear to maintain our physical health is useful for our fiscal health as well. This is a great time of year to take the opportunity to share healthy financial choices with our children.

Provide Healthy Choices

Discuss things your child enjoys that are free, such as playing with a friend or going to the library. Teachers report year after year that it is not the toys their students remember but the time they spend with their families. The card games and puzzles, the snowball fights and family meals are important healthy financial choices. A good book on this topic is, “Alexander who used to be Rich Last Sunday” by Judith Viorst. You can talk to your child about all the ways Alexander used his money and more importantly …was he happy with his choices.

Portion control

Many health advisors remind us to manage our portions to minimize over indulgence. This Holiday season take the opportunity to think about ways we can talk to our children about spending plans. How much money do they have and how do they plan to spend it when buying gifts for the family. Remind your children about added expenses like taxes and work with them to think about ways to stretch their dollars. Show them how to comparison shop and emphasize the gift of time. Promising to rake leaves and shovel driveways would be greatly appreciated by many family members. A good book to read together is, “Sheep in a Shop”  by Nancy Shaw. Ask your child if it was hard for the sheep to decide and how did the sheep solve the problem of not enough money?

Set Realistic Goals

When setting health goals we want the goal to be realistic and manageable and the same applies to finances. Young children may be confused about delayed gratification and buying gifts for others. It can be difficult for children to give a gift they may want themselves. Talk to your child about things that take time, plant some seeds in a cup or in a garden, and wait for them to grow. Together, take care of the seeds to help them grow. Or, sit down as a family and create a “family fun” list for winter, spring, summer, and fall. Write down all the activities that your family likes to do together. Some activities are free, like going for a walk or playing a game, and some activities cost money. A fun book to read together about realistic goals is, “Curious George  Saves His Pennies”  by Margaret and H.A. Rey

For more ideas or book suggestions about money, refer to the “Money as You Grow Bookshelf” by the Consumer Financial Protection Bureau. Additional family finance resources available here.

Barb Dunn Swanson

With two earned degrees from Iowa State University, Barb is a Human Sciences Specialist utilizing her experience working alongside communities to develop strong youth and families! With humor and compassion, she enjoys teaching, listening and learning to learn!

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Family Finances in the New Year

As the New Year approaches, are you writing down some goals or resolutions? Each year, I try to identify one or two new things I want to try, or do differently. I often use the beginning of the New Year to adjust my savings strategy so that I can also meet my goal of having some funds to be able to travel and visit my family when summer rolls around.

This is also the time of year that I have to pay the bills for the gifts that I purchased during the holiday season. Having a spending and savings plan is important.  Children learn so much from watching how other family members and friends use money. As adults we can model good spending habits, and educate our own children so that they will develop good consumer management skills. You may be curious about what resources are available to help you teach your child about how money works or how to be a good money manager as an adult. I would like to suggest you explore the following links:

Wishing you and your family a great and prosperous New Year!

Barb Dunn Swanson

With two earned degrees from Iowa State University, Barb is a Human Sciences Specialist utilizing her experience working alongside communities to develop strong youth and families! With humor and compassion, she enjoys teaching, listening and learning to learn!

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Financial Lessons for Kids

Science of Parenting live interview with Quad Cities television station.  Click here

 

 

 

Janet Smith

Janet Smith is a Human Science Specialist-Family LIfe with Iowa State University Extension and Outreach. She currently provides family life programming in eight counties in southeast Iowa. Janet is a "parenting survivor". She is the mother of Jared-21, Hannah-20, and Cole-15. She and her husband, David have faced many challenges together, including their son Jared's Duchenne Muscular Dystrophy diagnosis.

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Money and Goals

Do you remember taking an economics class in school? What did you think about that class? Some will remember becoming dizzy by the numbers, others may have thought it was boring, and others may have been astounded by the technical aspect of all the numbers! Having a basic understanding of economics helps to guide our use of money throughout life!

 

Families who talk openly about setting financial goals including saving and budgeting, set a good example for their children to follow. When prices increase families have to have a spending plan that will meet their income and pay the bills! For many families, these discussions are difficult because we want to protect kids from the worry of adult family financial pressure. Opening the doors of communication can help the children realize why requests for new toys, or game systems come with the word “NO” more frequently than we like.

 

Helping children to understand that money is earned through hard work and that putting extra money away through a savings plan is one way to work toward earning a new game or toy!   For many of us MONEY is an emotional issue, and those emotions affect spending decisions people make. As parents, our job is to help children explore their personal feelings and attitudes about money. When confronted with the difference between “needs” and “wants”, and knowledge about the most current balance in the checkbook, even children can make decisions about spending or saving!

Barb Dunn Swanson

With two earned degrees from Iowa State University, Barb is a Human Sciences Specialist utilizing her experience working alongside communities to develop strong youth and families! With humor and compassion, she enjoys teaching, listening and learning to learn!

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The Tall Tale of a Bank Robbery…

Guest blogger, Carol Ehlers shares insight with us on talking about money with children.

There we were at the bank, my 5 year old daughter and I, on a Saturday morning watching 40 pounds of coins be counted.  It was our daughter’s Christmas gift from grandparents’ year-long effort of saving coins.  I thought what a great teaching opportunity and ‘money adventure.’

When the bank clerk handed her the light-weight small bank envelope containing cash the emotion on her face showed deep concern.  By the time we got to the car there were tears and a demand that her money be returned. She was convinced that what was in the envelope did not equal her bucket of money and she had been robbed. That was over 10 years ago and the memory as well as this family ‘money story’ lives on.

Children get their first lesson on money management from the adults around them. By the age of three, children already have a good idea about how you feel about money. How you talk about it and handle it tells them a lot about how to approach money.

Children and Money

Children are not born with “money sense.” They learn about money by what they see, hear and experience. As they grow, children constantly are watching, listening and learning about money. How much does ice cream cost? Can I buy a new book or toy with my money?

As a parent, relative or other adult important in the life of a child, you are teaching the children you come into contact with about money. What would you really like them to be learning?

A great resource the Consumer Financial Protection Bureau’s Money As You Grow provides age-based activities and conversation starters to help your children develop money skills, habits, and attitudes that can serve them well as parents.

Remember:

  • You cannot not teach your children. They are learning from you whether you actively attempt to teach them or not.
  • One of the most important lessons you can teach children is positive money management.

Whether we as parents and caregivers realize it or not, children’s attitudes and values regarding money are influenced by how the adults in their world spend, borrow, save, share, invest and protect themselves with money.

Source: Talking to Children about Money

Carol Ehlers is an ISU Human Science Extension and Outreach Family Finance specialist working to empower consumers to take control over their economic lives. 

Lori Korthals, M.S.

Mother of three. Lover of all things child development related. Fascinated by temperament and brain development. Professional background with families, child care providers, teachers and community service entities.

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Talk to Kids About Money

Happy boy with raised arms

Many parents think they can hide financial stress from their children, but the kids always know – and they’re worried, too. Talking together openly about family finances is a better way to lower everyone’s stress level and also teach kids about money.

 

Listen in while we start the conversation on children and money.

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Lori Korthals, M.S.

Mother of three. Lover of all things child development related. Fascinated by temperament and brain development. Professional background with families, child care providers, teachers and community service entities.

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What Do Children Really Want? What Do They Really Need?

Beautiful little girl child with shopping colorful paper bags in

The cost of raising children is expensive.    It’s an art and  a skill to balance the child’s wants, needs, and desires, with your financial means.  But, sadly the emotional and social impacts of these decisions is often ignored. The parent experiences stress and the child-parent relationship is sacrificed for increased work hours in order to provide.  We have to wonder is the cost worth it?

What children really desire is a close personal relationship with their parent, and because parents are often overextended, parents tend to compensate for their absence utilizing their wallet. They buy, and buy and buy, and might just over extend their bank account. What children and teens really want is attention from their parents. So the next time you feel compelled to purchase something that your child might not really need, instead, schedule some one on one time and consider the cost: PRICELESS!

 

Barb Dunn Swanson

With two earned degrees from Iowa State University, Barb is a Human Sciences Specialist utilizing her experience working alongside communities to develop strong youth and families! With humor and compassion, she enjoys teaching, listening and learning to learn!

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What Do I Get the Grandkids?

I’ve got my list and I’m checking it twice. No, I’m not the jolly old Santa whose lap the kids climb on with those endless “I want” lists. Rather I am the Grandmother wondering what I can get the grandkids that they will appreciate and use. Gone are the days when it was so easy buying for the babies.

So what to do? Well I could get a list from the kids or ask their parents for ideas. Or, I could figure out ways to give of myself to strengthen the bonds of connection. Perhaps there is a combination of the two that makes sense for me.

Kristi Cooper, a co-worker, recently wrote two handouts that are filled with practical ways to create meaning.

Giving and receiving gifts is an expression of love. It can be done in a manner that is respectful to needs, wants, finances, and family values. When gift giving occasion arise – holidays, birthdays, and special events – I give from the heart. Honoring the special connection with my grandkids is priceless.

How do you handle gift giving with your grandkids?

Donna Donald

Donna Donald is a Human Sciences specialist for Iowa State University Extension and Outreach who has spent her career working with families across the lifespan. She believes families are defined by function as well as form. Donna entered parenthood as a stepmother to three daughters and loves being a grandmother of seven young adults.

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A Vampire Named Energy

thCAMHX0F3During October we are surrounded by visions of vampires – costumes and advertisements and TV shows. But have you considered that vampires are with us every day of the year in the form of energy suckers?

Basically an energy vampire is an electrical product that cannot be switched off completely unless it is unplugged. For example a cell phone charger, if left plugged in, will continue to use electricity 24 hours a day. I found a list of the biggest energy vampires which are: TVs, window air conditioners, computers, video game systems, microwave ovens, and power tools.

Granted, most products go on “standby power” but when you consider all the electrical things in your home, it adds up fast. So how can we defeat the vampires?

The surest way is to unplug anything not in use. But that can get cumbersome so an alternative is to fight the energy vampires with power strips. Plug TVs, video game systems, DVD players, etc. into a power strip. Then flip off the power switch when done. This is way easier than remembering to pull lots of plugs. Get another power strip and do the same for all the chargers for cell phones, tablets, and computers.

Enlist the kids in helping find and fight the energy vampires. Have a little fun with this and train the whole family to “flip the switch” and “pull the plug.”

Donna Donald

Donna Donald is a Human Sciences specialist for Iowa State University Extension and Outreach who has spent her career working with families across the lifespan. She believes families are defined by function as well as form. Donna entered parenthood as a stepmother to three daughters and loves being a grandmother of seven young adults.

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Who left the lights on?

How many times do you walk in a room where the lights are on but no one is there? It’s so easy to flip the switch and yes, we’re spoiled by the instant light. I wonder what it waEnergy saving light bulb with recycling symbol over blacks like to light a lamp, clean a lamp, carry a lamp, when you needed light. And if the electricity goes off and we’re left in the dark, we don’t like it one bit.

Lights are a simple place to start the energy use conversation with your kids. Have the kids go through the house and count all the ceiling lights and lamps. Then put a glass jar labeled “lights” and a dish of paper clips or pennies on the kitchen counter. Every time someone turns off a light she puts a penny in the jar. Every time Mom or Dad enter an empty room and find a light left on, they take a penny out of the jar. Try this activity for a week and see how full the jar gets. This is a visible way for everyone to keep track of this habit.

Another idea is to take the kids with you to the store to look at light bulbs. Help them compare  incandescent, fluorescent and LED products. The kids will be amazed at the options.If you haven’t started converting light bulbs, decide as a family where to begin. Maybe the kids will want to try new products in their rooms.

What have you done in your family to tackle the “lights left on” problem?

 

Donna Donald

Donna Donald is a Human Sciences specialist for Iowa State University Extension and Outreach who has spent her career working with families across the lifespan. She believes families are defined by function as well as form. Donna entered parenthood as a stepmother to three daughters and loves being a grandmother of seven young adults.

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Storms of life…

A wild ‘Dust-nado’ that sent the town/schools scrambling a few weeks ago and the topic of Divorce made me think about how we cope with ‘storms’ of life.

In a sense we begin coping with all storms the same way. We open our toolbox of what we ‘know’ and begin to apply the skills to the storm. If the storm is small we may have all the tools we need to cope effectively. But as the storm grows we need to be open to allowing others (personal and professional) to help us fill that toolbox with the right tools. You really don’t want to use a hammer when you NEED a screwdriver (well in most cases- HA!).

In the midst of storms it can be difficult for us to determine the right tool to use for the storm we are in because we are in the middle of if surrounded by the yuck and muck. It can be hard to allow others to help us use the right tools – I’ll be the first one to admit I like to solve problems on my own! So I challenge you as I challenge myself – can you let others help you choose the right tool for your storm?

What tools have you found effective for life’s storms? Both big and small?

Lori Korthals, M.S.

Mother of three. Lover of all things child development related. Fascinated by temperament and brain development. Professional background with families, child care providers, teachers and community service entities.

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I Need It!

Or is it – I WANT it? For many of us, spending is the fun part of having money. Sometimes we do a good job of making spending decisions and other times, we probably could do better.

Our kids are no different. It’s hard for them to understand what you’re talking about when you start sharing ideas about making decisions. But what they will catch on to is how you make your choices.

So – listen to yourself. How often do you say, “I need this _____” when really you are saying, “I want ________”? All of us have lots of needs and wants. And young kids are apt to think they need everything and want it right now.

Here are a couple simple definitions for needs and wants.

  • Want – something you wish for very much but could live without
  • Need – something you have to have to live every day

Usually kids (and us adults) have more wants than needs. Here are four questions I used with my daughters when they wanted to spend money.

  • Do I really want it?
  • But, do I really need it?
  • Can I get along without it?
  • How can I pay for it?

Try using these questions when you want to spend money. See if you’re spending your hard earned money on needs or wants. Remember, your child will learn the most by simply watching how you spend your money.

How are you teaching your child the difference between needs and wants?

Donna Donald

Donna Donald is a Human Sciences specialist for Iowa State University Extension and Outreach who has spent her career working with families across the lifespan. She believes families are defined by function as well as form. Donna entered parenthood as a stepmother to three daughters and loves being a grandmother of seven young adults.

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Did My Parents Teach Me Right?

I grew up as a Missouri farm kid. There wasn’t much money but lots of chores – both inside and outside the home – and certainly no allowance. I had a piggy bank for small savings. And yes, my dad gave me a dollar for each “A” on a report card.

Did my parents teach me the right things about money? As an adult do I have a healthy relationship with money? Did I teach my daughters what they needed to know about money?

These are pretty weighty questions and ones that can cause a little guilt. So I was excited to hear the experts share the research results and their interpretations. The bad news is that the research isn’t conclusive and the good news is that the research isn’t conclusive. I also heard the experts share differing opinions. Whew – don’t need to feel guilty.

What I did learn is that parents don’t have to try to do everything a particular way. Many everyday mundane tasks involve money. Children learn from how they see their parents handle the family funds.  We are back to that role model concept that keeps coming up on most any topic.

So let me give you some questions to ponder.

  • What are you teaching when you pay for items with a credit card?
  • What are you teaching when you balance a check book or reconcile a bank account online?
  • What are you teaching when you give to your church or a local community project?
  • What are you teaching when you save for a new computer or flat screen TV?
  • What are you teaching when you complain about paying bills?

The list could go on and on. I just wanted to get you thinking about how what you do is always teaching. Anyone want to share a good story about a time when you taught your child a lesson about money by your behavior?

Donna Donald

Donna Donald is a Human Sciences specialist for Iowa State University Extension and Outreach who has spent her career working with families across the lifespan. She believes families are defined by function as well as form. Donna entered parenthood as a stepmother to three daughters and loves being a grandmother of seven young adults.

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