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Money Savvy Kids Don’t Grow On Trees

Gen Alpha has spending power. Here’s how I’m teaching my kids to use theirs wisely.

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Toni Husbands

I write about money because I enjoy helping others avoid the mistakes I’ve made. So naturally, financial literacy training is a priority for me when it comes to my Gen Alpha tweens, ages 12 and 10.

They’re not enrolled in online classes or studying economic theory. But I look for, and sometimes create, teachable moments to reinforce age-appropriate lessons about how money works, how best to manage the money we have, and how to generate more. For example, when my son insisted a payroll deduction wasn’t fair because it happened without his permission, we had our first discussion about taxes.

And it seems these lessons are timely. Gen Alpha isn’t old enough to work traditional jobs without parental consent, yet 90% of them are already earning money for things like chores and babysitting, according to a report from New York City public relations firm DKC. Gen Alpha kids have a median amount of $45 to spend per week, according to the report.

I only have six to eight more years before my children are old enough to leave the nest, and I want them to start their adult lives with a solid financial education. So, here’s what I’m doing, along with their father, to make that happen.  

Creating money-smart kids, one lesson at a time

My process has evolved as I learn more and figure out how my children respond to various lessons. Overall, patience, persistence and a lot of repetition have been the key to helping them understand.

These are the major lessons I’ve tried to instill in my children and the most effective strategies I’ve found to do so.

The value of hard work

Both of my children have been acting professionally for the past four years. They now earn anywhere from $400 to $3,500 per project. While they may only book from one to three projects a year, their paychecks give us a tidy sum to work with.

Before the acting bug bit, they earned money for good grades because I wanted them to appreciate the benefits of hard work. Early elementary A’s and B’s didn’t pay much, but that was my way of helping them earn the money they needed to practice other skills.

Gregg Murset, CFP and CEO of chore app BusyKid, recommends assigning children chores to tie money together with the value of hard work. “The work-money connection is very important because I’ve searched high and low, and I can’t find a job where you can sit, do nothing and get paid,” Murset said. As a father to six financially responsible adults, he’s had plenty of practice teaching kids about money.  

Give, save and spend

For any income my children receive, whether it’s from an acting job or a birthday gift from their relatives, we execute the following ritual:

  • I email them the total amount they’ve received and ask them to calculate the breakdown for their save, give and spend categories.
  • They practice their math skills by allocating 10% of their income to giving, 10% to saving and 5% to their spending account. (The remaining 75% goes toward investing; more on that later.)
  • Once I receive their email, I distribute the amount to their respective accounts.

Murset said we can think of building money skills like practicing the piano or basketball training. “Earn it. Split it. Earn it. Split it. If you do that over time, they’re going to get good at it,” he said. 

I initially opened a high-yield savings account for both children. Next, I purchased certificates of deposit for them to lock in a higher annual percentage yield, or APY.

As the year progresses, I show them their account balances and we look at how much interest they’ve earned. I doubt they appreciate the power of compound interest, but I emphasize that leaving their money in an interest-earning account adds to their bottom line every month.

I opened a Step debit card for kids because I wanted them to have accounts in their names that didn’t charge a monthly fee. Chase offers a reasonable youth account for customers. It turns out that having a debit card or mobile pay option is helpful during school outings because many vendors don’t accept cash.

Investing as child’s play

I opened investment accounts for my children two years ago. They don’t fully grasp the concept yet. But they know that 75% of all income they receive goes into their investment accounts.

To personalize their experience, I let them choose companies whose products they like or use. For example, if they like movies produced by a publicly traded company, we look up factors such as price-to-earnings ratios and earnings-per-share to help them decide whether a company is a good investment.

I deposit the bulk of their investment dollars into an index fund and allow them to buy a few single stocks based on their analysis. We look at the portfolios several times a year -- generally when they receive additional income -- and decide where to invest and if we should make any other changes. 

At this point, I think they just understand that this is money we’ll be able to use someday for a large purchase and that the longer we leave their money in the account, the more interest they earn. But that still puts them leaps and bounds ahead of kids with no investing knowledge.

Budgeting for the fun stuff

My Gen Alpha tweens are no different than most children: They want stuff. While I can’t imagine asking my parents for a $400 toy at their age, times have changed. 

Instead of rejecting my son’s appeal for an expensive video game console three years ago, I challenged him to save his money. He decided to purchase a secondhand version that worked well and was half the price. (Kids become more cost-conscious when spending their own money.)

His next large purchase was a new laptop with more processing power to support his video-editing projects. He researched the options and elected to wait until the holiday sales so he could spend less on the computer he wanted.

Now, he wants to upgrade the video game console. However, instead of asking me to purchase it, he asked if he could save his money to buy the latest version. I support this approach wholeheartedly. 

Yes, he could buy it outright with the money he’s earned. But he’s embraced the idea that his savings are for something significant -- college expenses or a house, in his words -- and that if he wants to buy treats, he needs to have enough money in his spending account for them. 

It’s a win-win. He’s saved half of the money for the new console, and I don’t have to say “no” because he already has a working game system.

Other ways to teach your kids about money

The good news is that your kids want to learn more about money, according to a survey by Greenlight. “Parents should know that kids will likely be receptive to learning more [about finances] and building their confidence,” said Jennifer Seitz, director of education for Greenlight. “Our survey found that 75% of Gen Z and Gen Alpha want more personal finance education.” 

Seitz suggests parents develop financially socialized children by:

  • Being an askable parent who is open and responsive to questions about money.

  • Being mindful of what you’re modeling regarding money.

  • Including your children, when appropriate, in your money-related decision-making discussions.

  • Helping them set savings goals and sticking to them.

  • Including them in budgeting for certain family financial decisions. For example, let them calculate how much the family should save per week for an upcoming vacation.

  • Teaching them how to delay gratification.

Resources that teach kids about money

My children seem to understand financial concepts best when I can tie the lesson to an activity, whether that’s looking at the interest earned on a high-yield savings account or researching charitable organizations to support. Some great ways to do this with your kids include:

Books. Learning how others present financial topics to young learners can help you come up with ways to teach your kids. “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous and Smart About Money” by Ron Lieber profiles families across the income spectrum raising their children to be financially responsible, generous and free from the trappings of materialism.

Board games. You can also explore financial topics with kids using games. Monopoly Jr. introduces investing concepts sprinkled with fun and healthy competition that doesn’t drag on for hours. Cashflow for Kids delves into a wider range of financial concepts by modeling real-world scenarios, such as running a small business and deciding how to handle unexpected expenses.

Apps. Level Up is a free game with video lessons on spending, savings and investing by Greenlight, a popular debit card for children. Following each lesson, your child can answer multiple-choice questions for points and in-game rewards. You can download the game through Greenlight’s app. You don’t need the Greenlight debit card to play the game.

You can set your kids up for financial success

I have yet to cover many money topics in detail with my children. For example, the jury is still out on when we’ll introduce actual credit cards rather than just debit cards, but I know that’s a topic I want them to understand before adulthood.

There’s no one-size-fits-all approach to introducing money topics. Teaching kids about money is an ongoing process. And if you’re still building your own financial literacy skills, allow them to learn with you. 

Remember, teaching your kids healthy financial habits is a marathon. You can do this, one money lesson at a time.

Toni Husbands is a staff writer with CNET Money who enjoys exploring topics that promote financial wellness. She began writing about personal finance to document her experience paying off $107,000 of debt, which is detailed in her book, The Great Debt Dump. Previously, she contributed as a freelance writer for websites, including, Centsai and Wisebread. She was also a regular contributor to Business AM TV, and her work has been featured on Yahoo News. Being a part-time real estate investor and amateur gardener also brings her joy.
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