Amazing Kids! Magazine

Introducing our New Column – Money Smarts

By Ryan Traynor, Editor-in-Chief

 

Many parents think that they can wait to teach their children about money. But money concepts are used every day and as kids, we’ll excel at planning, budgeting, and earning if we learn some Money Smarts early. So, join us as Amazing Kids! Magazine introduces you to some Money Smarts concepts. Learn banking basics, the concept of saving and investing, where money comes from, how to earn money, and more. We’d love to hear all about your experiences with money too. Just email us your stories at editor@amazing-kids.org.

1. Learning about Money – the sooner the better.

You’ve probably heard the saying, Money Grows on Trees. When we were young, our version of this might have been turning to our parents and saying, “I want you to buy me that.” However, we learn very quickly that money doesn’t grow on trees and there is no endless supply of money in our parents’ wallets or at the ATM machine.

The first thing we must understand is that money comes from someone doing something of value for others. They are willing to give that person money for performing that function. So, the number of hours your parents spend at work are so that they receive money to support the family for their efforts.

2. Saving versus Spending.

We know that we can buy things with our money, but we don’t always have enough to buy what we want. This is where planning comes into play. Say you decide that you want to buy yourself a video game, but it costs $40 and you only have $20. What do you do? You need to decide if you want to have instant gratification and buy that soda pop after school every day, or save that money until you save enough to buy the $40 video game. You need to sort the things you buy into “Needs” and “Wants”. For instance, you might think, “I’ll save my lunch money every day so I can buy that video game. However, lunch is a definite need so you shouldn’t move money from your “Need” category into your “Want” category. List the items that you spend your money on that you could give up. These may include: candy, drinks versus water, an expensive phone plan, or even small toys that you enjoy less than the bigger item you want. Go through the list and decide what you can spend less on. This may include spending less on a category because you give it up, use less of it, or bargain shop and buy it cheaper. Then you can move that money into savings for your video game until you have enough.

Remember beginning a budget to get what you really want at an early age will make you better at saving money in the future. So why don’t you begin today? List what money you receive each year from: gifts, allowance, odd jobs, found money, selling items such as used toys and clothes, interest on saved money at the bank, etc. Then list what you spend your money on: needs versus wants. Focus on the wants column and decide if you are spending your money on the right things. Would you get more enjoyment if you held off spending your money right away in order to purchase something else down the road that costs more? If so, plan how you will move that money into the savings column and plan out when you can buy that better thing. It will be worth it!

3. Using Banks

Putting your money in financial institutions can help you meet your goals. How? Banks offer numerous tools to help you manage your money. Putting your money in a financial institution (we’ll talk about the different kinds of “banks” in a future article) offers you safety – from your money being lost or stolen at your home, convenience – most institutions are near your home and also offer ATM services nationwide, expert advice – people in the bank to tell you about options, security – banks are insured so your money is safe when deposited in them, and earning – many accounts pay you money for depositing your money for a period of time in the bank (called interest).

4. Practice Money Skills

Just like anything in life, you’ll get better at something the more you practice. For money smarts, that is also true. How do you practice? Go with your parents to the grocery store and ask to help with shopping. Offer advice when picking out various items. You will see that there is usually a link between quality and cost. If you want to save money, you’ll have to give up on freshness, quality, or proven brands. You may choose to buy a store brand instead of a well-known brand because it is a lot cheaper. You will also find that on the store shelves you can usually find out how much the cost per ounce is of most foods. This makes price comparison shopping easier.

A game my parents did with me when I was younger could be introduced in your household. My parents would take us to a resale or retail shop and give us a set amount of money apiece. We were then sent on a scavenger hunt to spend the money. The person who came back with the best items within the budget, was the winner and could purchase the goods picked out. Try games like these at your home and you’ll quickly learn how to get the best value for your money. It can be finding the cheapest price for a particular item online, buying something in bulk to save money, or changing stores because saving money was more important to you than wide aisles or top quality. Maybe your parents will allow you to keep part of the money saved if you help them find coupons for things you regularly buy. Talk with your parents and find ways to try out your new money smarts.

Keep coming back each issue to learn more about money smarts. These skills will help you all your life reach your goals.