Ensuring that your children are well- informed on the basics of budgeting, saving and compound interest is essential for their future financial security. Opening a bank account for them, providing them with an allowance, allowing them to make their own spending decisions so they can learn from mistakes, and teaching them to save for a more meaningful purchase down the road are some ways to develop financially savvy kids.
Introducing them to online financial learning tools can also help engage kids who are more receptive to digital learning. UBS has partnered with EVERFI, a leading digital financial education company, to offer a complimentary series of online courses that runs from elementary school through high school, college and even into young adulthood.
However, talking to your family about finances needs to be a broader discussion about how money fits in with your "values" according to Judy Spalthoff, Head of UBS Family Advisory and Philanthropy Services Americas. Having shared goals and values can improve the bond between family members and help children develop a relationship with money. “Our values are at the core of all of our decision making, " says Spalthoff. "We believe that families need to have a foundational conversation about their values and what is important to them as a family and as individuals.”
A UBS Investor Watch survey titled "When is enough, enough?" found that more than half of high networth investors were worried that their children did not understand the value of money. Nearly 60% said they wanted to teach children about managing wealth without overemphasizing money.
The lockdown and its wide-ranging effects have, however, presented families with some teachable moments that go beyond counting pennies.
Needs vs wants: Explaining your spending decisions can be tricky when children have a hard time distinguishing between needs and wants. But the lockdown has shown how families prioritize spending - focusing on groceries, medical and cleaning supplies for instance, while putting off purchases of fancy clothes, shoes or handbags that are no longer pressing needs in the days of social distancing.
For many this is a necessary budgetary trade off during hard times, but for some the lockdown has been a time to re-examine some of their spending decisions in the face of a pandemic. Take the opportunity to explain how you are spending differently and how "needs" come first in every household budget.
The other learning moment in this pandemic has been the ability for all of us to just make do with less. With supply-chain disruptions delaying deliveries of many goods, parents and children have had to get more resourceful with things they already have or "upcycling" items at home, providing a unique opportunity for children to understand how far one can truly stretch a dollar.
Explaining privilege: In order to raise kids who aren't entitled and understand the value of money, we need to build awareness about the wealth/opportunity gaps in society. With older kids, you can explain how some families are more negatively impacted than others by lockdown and social distancing measures due to circumstances beyond their control. Not all work can be done remotely, causing millions to lose their jobs. Poorer families are dependent on schools to watch and feed their children and the closure of schools has made it difficult for them to return to work even if they can.
Talk about how lockdowns hit developing countries harder where medical resources are scarce and social distancing is hard to enforce when people live in small, overcrowded quarters.
Pick a volunteer project: As you look for ways to keep your children engaged this summer, use the time to work on a project together as a family. Talk to your children to find a cause they care about in the pandemic and how they would like to contribute while observing social distancing guidelines. If possible, make it a hands-on activity, be it packing food bags for frontline workers, helping deliver books to children who don't have access to online learning tools or simply boosting the spirits of the elderly in isolation by sending them cards with positive messages or video-chatting with them.
Main contributor: Shanthi Bharatwaj
UBS has teamed up with EverFi to offer financial education to young adults. Personalized guides can help you build a foundation, and a future. Find out more here.