Personal finance has a language all its own. To get our kids fluent, introduce the terminology and incorporate it into daily conversations.
A is for Assets – meaning your belongings that are worth something, like gaming systems, sporting equipment, or bikes. They may not be income-producing assets, but they could bring in a few bucks on the second-hand market if push came to shove.
This weekend our neighborhood had its semi-annual get-junk-out-of-your-garage event, er, I mean, community yard sale. The kids look forward to it and the conversation began Friday night. B is for Budget – how much do you intend to take with you, and is there anything special you are looking for?
Early Saturday morning, the three set out on their bikes with $30 cash in each of their pockets (from their spending ledgers). I warned that they could buy things that might be broken and there’s no return policy. While I wouldn’t suggest neighbors are trying to defraud anyone (because F is for Fraud), there are no guarantees when it comes to buying used stuff at yard sales. Caveat emptor, my friends.
They returned with a crazy amount of stuff – treasures ranging from a $2 frayed Indiana Jones braided leather whip, to an overflowing 50c bag of seashell décor, to a $5 kid-sized combo air hockey & pool table (When I asked how the boy got this home on his bike, he said the neighbor helped). There was so much more - I couldn't believe how much they scored. They were ecstatic.
The yard sale illustrates another key concept: D is for Depreciation. Collectively, those items cost tens to hundreds of dollars new. My kids got them for 5-10 cents on the dollar. So while assets are things you own with some value, the value is greatly diminished over time. Speaking of which – V is for Value; we’re able to have a contextual conversation when they see neighbors asking either silly high (or silly low) prices for their unwanted items. The kids can grasp both of these concepts when they experience it first-hand.
We can also talk about how J is for Job, which is how they had this spending money in the first place – the latest injection being from pet sitting in the neighborhood over spring break. And how S is for Saving – and for Spending. Had they not saved some of their earnings from several weeks ago, they would not have had the money to participate in this second-hand economy they enjoy so much.
M is for Money and it’s a wonderful tool to have at one’s disposal. When children are able to practice earning, saving, and spending, they develop skills and judgement that will serve them well their whole life long. You cannot begin early enough teaching kids personal finance.
How do YOU talk about financial terms in your family?
Stephanie Brooke Lennon is the author of Family Bank Blueprint, GoldQuest, and What Would Water Do? Simple Strategies for Navigating Life's Obstacles. Her titles are available in Paperback and Kindle on Amazon.com. Follow Stephanie Brooke on Facebook, Instagram, TikTok, YouTube, Twitter, Amazon, and at ​BrookeLennon.com.