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Financial Literacy Month: Teaching Kids Finances for Take Your Kids to Work Day

by on April 26, 2012

By Stephanie Lewis

Today is Take Your Kids to Work Day! Since we’re still in Financial Literacy Month, what better time to teach your kids some important money management skills for both occasions?

To help get you started, the PowerWallet team has put together the following tips and tricks to help you and your kids get the most out of them coming to work with you.

Paychecks 101. You know how young kids seem to think money grows on trees? That could be because they simply don’t really get where the money really comes from and how it gets divided up. Use Take Your Kids to Work Day as a way to introduce them to paychecks and how taking home income works. You can explain how paycheck deductions work and show them the difference between what you earn and what you actually take home.

– Take a first look at taxes. Over half of all Americans use a paid tax preparer to do their taxes each year. That’s one extra expense simply because most of us don’t really understand how taxes work. Start teaching your kids about taxes early today by showing them how taxes work when it comes to your paycheck. Explain about deductions and tax filing, as well as how refund checks work to give them a good introduction to taxes.

– Benefits for beginners. Statistics show 3 in 4 working-age employees are simply not making any preparations for retirement. Teaching your kids about benefits at work—particularly about retirement benefits—can help them get a head start on the other kids in understanding why they have to save. You can even talk to them about what you want to do for your retirement and how you plan to get there so they learn about setting financial goals and learning how to reach them.

With the basics out of the way, you can then offer a fun financial lesson plan to help your kids learn how to make a budget. Armed with pens and paper, give them a “salary” and help them decide what to save, what to spend, and what will need to be set aside for things like bills and monthly necessities. You can even give them a mock stack of bills that they have to calculate and factor into their budget. They have to make a budget that works with their income that allows them to pay the bills on time and set aside at least a little bit of money for savings.

Once they finish review the budget and see how they did. If you need to explain something further, you should be able to identify it easily based on what they got on their budget and what they didn’t. Not only will this help your kids be a little better financially prepared for the future, it will also help make them more aware of all the things you income has to cover. Kids who are more educated and informed financially are less likely to throw tantrums because they want the latest and greatest toys.

You can even finish the day off by talking about a monthly “salary” (allowance) they can earn for doing their chores and going to school. You can also talk about things they want and setting the amount of money needed for each as a savings goal in their budget. Talk about how much they will get and have them use the budget skills they learned on the paycheck lesson that day to determine their own monthly spending and decide how to best save up to reach their own goals.

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