Parents know that just about any event in life can be turned into a teachable moment for kids. A natural disaster strikes – teach your kids about philanthropy and emergency preparedness; watch the presidential debates on television – teach your kids about the basics of democracy. Yet, for many parents, talking about money and family finance has always been taboo.
A recent BMO Harris Bank national survey showed that 89% of U.S. parents consider themselves the best resource for children to learn about money management, but only 36% actually talk to their kids about personal finance on a regular basis.
Many parents also wonder how they can make money management fun for kids, and how to make kids pay attention. Chances are, kids are already playing educational online games in school computer labs, so why not switch off the television for a night and teach kids with the tools they use every day.
One such financial literacy game has garnered educational accolades. Two former Stanford University students, Min Lee and Audrey Tan, developed PlayMoolah.com to teach kids about money management. The site has earned awards from Innotribe Startup Challenge in Singapore this spring and was featured at FinovateFall in New York in September, reported American Banker.
According to the site, PlayMoolah engages both parents and kids as the game teaches children to earn, spend, save and give in an educational and safe way. Players get to invent their own planet, choose a job, and earn virtual money. Parents can sign up their kids for free, but parents will be required to pay a monthly fee for kids to advance in the game and learn more money management concepts. Parents receive e-mail alerts to track their child’s progress and see what they are learning, so they can integrate the same lessons into real life scenarios.
Aside from online games, BMO Harris Bank offers tips on how to teach kids about money.
For young children ages 5-9, open a savings account as soon as kids begin to collect coins. Explain the concept of saving and how interest works. Encourage kids to set aside a portion of money from birthdays, Christmas, allowance or little jobs in their savings account. If kids have their eye on a certain toy or bike, use their wish list a motivation.
For older children ages 10-12, teach kids about the basics of investing, having a balanced portfolio using simple concepts and basic language. Explain that buying stock means you own a tiny piece of a company and show them how the value of stock goes up and down using the newspaper or the web. Track companies that they can relate to like Disney or McDonald’s. Once kids understand these concepts, BMO Harris Bank recommends allowing children 13-19 make small investments in a couple stocks Show them how to read stock prices in the newspaper’s financial pages or online. This is also a good time to start talking to your children about different types of savings including 401K and IRA plans.