Warren Buffett of Berkshire Hathaway. Francoise Meyers of L’Oréal. Jeff Bezos of Amazon. Alice Walton of Walmart.
What do these people all have in common with the child sitting across from you at the breakfast or dinner table?
They were all children once, too. Children who likely all learned how to be money savvy, how to invest and how to save and budget money very early on.
What does that mean for your child’s future? Are we telling you that your child is destined to become one of the next richest people in the world?
No, we can’t make a promise of what’s to come for their financial future, but we can tell you that we sincerely believe setting a foundation early for your child is an important stepping stone for their development as financially responsible, knowledgeable and money-savvy people.
Here are three tips for turning your child into a money savvy kid in 2022.
1. Teach them to budget
The three jar/box/container technique can be a powerful one to teach your children how to budget money, which has obvious advantages in the long-term.
Label each of these containers to represent a different item they could spend money on, according to the amount of money you want them to be able to put in the container for that item/category. From there, every time you give them money over the next month, help them decide how to divide that money into those two or three containers.
This will, because of how quickly each respective container will fill up, teach your kids that they will only be allowed to save/set aside and spend a certain amount of money on less important things – like “toys/fun” – but other things like food will require more spending, and therefore the size of that container means they can and should contribute more money to that container every time they earn some.
It’s that simple. Using Tupperware or some other containers of different sizes and helping your kids divide the money they receive into those containers is a simple, fun, and easy way to start teaching your kids how to budget their money.
2. Turn lessons about money into a game
Children love games. What better way to teach your kid about money than by using a game to help them understand what’s happening?
Now, let’s be clear, we’re not talking about a game like Monopoly. We’re talking about a game that challenges children to make decisions in a real-life simulation to see how their choices affect the growth of their money over time.
Enter: Explorer Hop’s Global Investment Challenge
This challenge is a six-week simulation where participants invest in stocks, mutual funds and fixed income with the goal of growing their initial $30,000 virtual portfolio and seeing who can win the $500 grand prize at the end. No investing knowledge is required. Allow your child to jump into the world of investing and learn stock market trading to get a feel for what their future holds in a world of money-savvy living.
Like we said, why not let your child develop their skills and knowledge in a gamified environment where both learning and fun can happen all at the same time?
If you or your child think they have what it takes to compete against a global field of young investors aged 11-17 in our challenge, sign up here.
3. Let them make autonomous spending decisions
Give your kids the COMPLETE autonomy to choose what they spend their money on the next time you go to the store with money you have given them for chores, their allowance etc.
Do we sound crazy? Hear us out.
This is where the parental instinct to give your child the rest of the money for an out-of-their-price-range toy (or other item) needs to be held back. If they pick up an item that they cannot pay for entirely with the money they have earned and brought with them, do not help them pay for the rest. Instead, explain that they will either need to pick something now that they can afford with their own money or wait until they have saved up more money for the item they desire. This is key to teaching your children how to save and budget money.
This will further solidify their understanding of money by establishing that they cannot simply pick something they want and have it paid for. They must work to earn more money for that initially desired item or choose something within their financial realm of possibility, an important lesson that has clear and obvious applications to their future adult lives.
We reiterate: we can’t guarantee that the tips we provide or the programs we offer here at Explorer Hop will put your child on the doorstep of becoming the next multi-billionaire like Bezos or Walton. We can, however, confidently say that these tips and our programs can aid in your child’s progression towards financial literacy early in their development and set them up well for what is to come later in life.
Check out more about us and our programming on our website, here.