Parents need to use real life lessons to teach kids about money

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As parents of a 13-year-old, my husband and I take seriously our responsibility to raise a strong, self-aware and confident young lady.

This responsibility includes tackling two topics that can make even the most secure adult squeamish: sex and money. Fortunately, our daughter’s middle school provides supplemental parental assistance for sex education. However, when it comes to money lessons and personal finance, there’s not so much.

Sadly, only 17 out of 50 states require high school students to take a financial education course, according to the “2018 Survey of the States: Economic and Personal Finance Education in our Nation’s Schools.”

Research findings by the Champlain College’s Center for Financial Literacy suggest that most states get dismal grades when it comes to student financial literacy. Inadequate financial education leaves parents to figure out the lesson plans — even when they often are not trained effectively to teach the subject matter.

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So, what is a parent to do? I’ll share some stories that may spark your imagination.

When our daughter was 6, she became infatuated with American Girl dolls. The $100 price tag and the lavish accessories astounded me. What’s a mother to do when an only child emphatically proclaims: “Mommy, my little sister [the doll] should have the same things I have [too many accessories]”?

Frantically, I dug deep to find a counter-argument and decided to put her first-grade math skills to work. We ventured to a local store’s toy department in search of her “little sister.” She immediately rejected the dolls for not being the real American Girl doll. Here’s how the rest of the conversation unfolded.

Mom: “You are right. It is not an American Girl doll. Do you remember how much the American Girl doll cost?”

Daughter: “$100!” (She was so excited to share her knowledge of numbers.)

Mom: “Can you tell me how much this doll costs?”

Daughter: “$20!” (The number-trivia excitement continues.)

Mom: “You know your numbers so well! Do you know many $20 bills will give us $100?”

Together, we counted the bills in 20s (as per the school lesson) and discovered five was the answer (introducing multiplication). She then realized that she could have five dolls instead of only one. She also realized that her parents refused to spend $100 on just one doll. She finally accepted the $20 doll and $20 worth of accessories. Crisis averted, dream realized and financial empowerment set in motion.

We are fortunate that our daughter has a creative streak that complements her love for learning. With that said, since that purchase, she has used recycled materials and created accessories for her doll, such as purses and beds. She even built an apartment for her doll in her closet.

Although there was no market for her “luxury doll items,” she eventually took an interest in making jewelry. When she made enough jewelry pieces, we would sell them together at neighborhood and school fairs along with other novelty items. My husband and I would also buy them from her as gifts for friends.

When my daughter lost interest in jewelry making, some neighbors felt she would be the ideal candidate for checking their mail and watering their flowers when they were traveling. She was on to a new business, making $10 per hour.

We have taught her how to share, save and spend those earnings. She shares 10% as a donation to our church, saves 10% in her custodial checking account and has 80% to spend, which includes savings for long-term goals such as Apple AirPods and a Kate Spade purse.

Teaching children life money skills can be fun and engaging if you’re willing to be creative and explore options. And remember, it’s never too early to teach your kids about money.

By providing good money habits at an early age, you as parents are setting them up for a happy life of financial freedom as they grow, and it teaches them the importance of earning what they have.

— By Lazetta Rainey Braxton, a CNBC contributor and founder/CEO of Financial Fountains

Check out 4 Money Lessons Everyone Should Know by Age 25 via Grow with Acorns+CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

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