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Financial literacy is an essential life skill necessary to make informed decisions about budgeting, borrowing and more. Equipped with this knowledge, kids grow up prepared for financial independence.
Teaching kids and teenagers financial literacy often falls on parents’ shoulders — and it isn’t always easy. You need to both keep your youngster involved and interested and make the process fun. One way is to use exciting opportunities, like vacations, to teach your kids good saving habits.
Set goals for you and your kids
So, you’re going on vacation. It’s time to set some goals.
Decide where you’re going
First, decide on where you’re going. Use selecting a destination as an opportunity to get your kids talking about where they want to go and to create excitement. Pick a place together and let your kids know that the trip can only happen if they chip in financially.
Determine the costs
Involve your kids in the process. Break down the numbers for transportation, lodging, entertainment and other expenses. Show your kids the total and discuss how they’ll help you save that amount.
Set a timeline
Saving is a task, and that task needs a deadline. Talk to your kids about when the vacation is happening and agree on the date by which you need to meet your savings goal.
With the deadline set, you can move on to the most important part — growing your vacation fund.
How to build your savings
Let’s be honest: Saving money is rarely fun. Still, you need to keep the process engaging for your kids and involve them as much as you can.
Here’s what you can do.
Make a family budget together
With your common goal in mind, sit down with your kids and create a family budget. Show them how much money is coming in and how much you regularly spend. Provide them with room to discuss which spending categories can be trimmed to boost the savings.
Go grocery shopping together
Take your kids grocery shopping. Tell them that every dollar they can save at the store will go toward the vacation fund. This way, they can learn to pay attention to prices. Will this money go toward candy or their dream trip? Let them prioritize.
Do your part
Your vacation fund should be a team effort, so show your kids you’re working hard to save, too.
Let them know which of your expenses you’ve limited. Negotiate lower rates on your monthly bills and share with your family how much this can save them. Lead by example.
Cut back on day-to-day spending
Continue teaching your kids to prioritize savings. If they want a new toy, remind them of their goal. Or, see if they can part with some entertainment subscriptions, for example, to have more vacation time. Do they want Disney+ or an extra day at Disneyland?
Keep an eye on the progress and make sure your kids do, too. This task can be easy if you have the right tools.
Greenlight, a debit card designed for kids that allows you to set saving goals and track spending. As a parent, you’ll get real-time alerts any time the card is used, as well as access to historical activity on the account.
How Greenlight can be a resource
The card allows kids to create budgets and savings goals, monitor their balances, receive money from family and friends and more. And as a parent, you can track your kids’ card usage, set up store and cash-withdrawal limits, and block or unblock the card if needed. Another great feature is the option to pay your kids for chores and set up an allowance schedule.
Greenlight costs $4.99 a month for up to five kids. The card also charges no foreign transaction fees, meaning your kids can take their card on your vacation abroad and use it without you worrying about any hidden costs. Greenlight also charges no ATM or overdraft fees.
Greenlight can benefit both you and your kids. While your kids are learning the basics of spending and saving with the card, you can keep an eye on their progress and guide them along the way.
The bottom line
Teaching kids financial literacy is no easy feat. One of the best strategies is to create the feeling that your kid or teenager is engaged in family finances and allow them to come up with goals they’re excited to work toward.
A family vacation can be one such goal. Involve your kids in the process of saving and help them learn the basics of budgeting and prioritizing expenses as you go. This way, they can begin to understand financial responsibility, while looking forward to something fun and rewarding.
Tools like Greenlight can help you and your kids stay on track and further your kids’ financial education. With this debit card designed for kids, they can learn the basics of using a debit card, watch their spending and stay on track with their goals.