Welcome to an age where you will start to be amazed at how much your child is picking up when it comes to finance. If you’ve been working at steadily improving your child’s financial literacy, here is where you will turn to your spouse and utter in amazement “S/He is really getting this!”
Our oldest just turned ten, and over the past couple years Mike and I have been saying this to each other all the time. He continues to amaze and SURPRISE us in terms of how he approaches spending, evaluating his wants vs. needs, and most of all, prioritizing what matters to him.
He is now notably starting to build on the foundational concepts we’ve built with him – all on his own. Forming ideas and reaching conclusions about how he wants to manage his money by combining the foundational skills, independent of us.
After years of investing time and effort into ensuring he has a strong financial foundation, it’s extremely motivating to start seeing it culminate into one financially savvy young man.
All of which to say, if you aren’t there yet with your kids, or just starting out on this path, it is 110% worth your invested time and effort. Trust me.
And with a strong foundation built, learning opportunities to increase your child’s financial acumen bloom around every corner.
Here’s our quick checklist of areas to focus with your 8-10 year old:
Steadily increase their involvement and responsibility in all area’s of their spending, giving, and saving;
Continue to help them complete their annual taxes, but introduce the idea of expenses when it comes to income streams they have developed;
Keep up with the WII Dollars
Level up those chores;
Increase independence when it comes to consumer research;
Start talking about jobs;
Teach accountability and ownership for belongings;
Implement the Power Play Project (Or get your child’s school to adopt the program);
Spending – Giving – Saving
This is the age where it becomes appropriate to involve your child in reviewing the percentages and structure of the spending, giving and saving ratio. While you might fear that your child will suddenly want to spend the vast majority of their money, if you’ve been working on financial literacy for some time, odds are they will go exactly the opposite direction.
When we sat down to have this conversation with our son, all he wanted to do was decrease his spending and move that money squarely over to giving and saving. We actually had to encourage him to keep his spending at a reasonable level, just to ensure he still gets opportunities to make spending decisions.
Allowing your child to have input at this stage is the first step towards them taking ownership of making these decisions several years down the road.
It’s also the time frame when increased involvement in giving decisions becomes fruitful. Your child will have a much better understanding of the world around them, and how their circumstances differ from other peoples. This is also a great time to consider dividing your child’s giving money between a more local (relatable) charity and something with a more global perspective. An organization like KIVA can allow for not only the lending of micro-loans to people in need, but provides a forum for you and your child to review and discuss the loan details, and fund all/or a portion of the loans posted.
Not only does this familiarize your child with other peoples life circumstances, building gratitude for their own, it allows them to choose where they feel their dollars can be most effective. Given that the loans are ultimately repaid to the donor, this becomes an ongoing opportunity for those dollars to continue to be effective, rather than just a one time venture.
In terms of investing, the same rule applies. Allow your child to become more involved in discussions around where their money is being invested. Challenge them to come up with their own ideas as to where they might want to invest, then discuss any ideas the generate. Delve into why they want to invest their money in a given area, and help them do some basic research to determine if the idea should be actioned.
This is also when it’s a good time to start talking about how compound interest works, and the magical powers of time when it comes to growing savings.
At this age, I would also ensure that any purchases of additional equities be done with them present. Show them how to purchase online, and discuss what the various fields represent on your brokerage’s online order page. This will help them become familiar with the terms, leading to their ability to complete the form (with your supervision) as they get a bit older.
By now they will be really familiar with the tax process, and identifying their values in terms of their savings, investing and giving goals. It’s a great time to introduce the concept of expenses when it comes to any income streams they have developed.
Up to this point, they’ve probably been experiencing pure profit from their business endeavours, so now’s the time to introduce them to expenses. If they have been walking neighbourhood dogs, talk about the additional wear and tear on their running shoes, and the added cost incurred for buying new ones.
This doesn’t mean you need to charge them those expenses, but building awareness about those costs is the goal here.
If they’ve built an income where they use an online forum, talk about the cost of the monthly internet bill, if you drive them to the bottle depot to return bottles, discuss the cost of gas, mileage impacts on the vehicle, insurance, etc.
Use their tax ledger to input rough estimates of the related expenses, so they can get a better picture of just how profitable their business is, as well as to talk about ways to minimize expenses in order to improve profit margins. Again, you don’t need to dock your kids $50 for gas money to run them around getting supplies, but it’s important that they start to recognize and evaluate those expenses when assessing their income streams.
WII $ Auto-pilot
If you’ve elected to use the WII $ method, or something similar, by now this whole system will be on auto-pilot. Your child will have an excellent grasp of how to manage their currency, and is probably coming up with all sorts of schedules and idea’s to maximize efficiency of their WII dollars.
If you’ve been generous when it comes to docking WII dollars for missed chores, nows the age to crack down on that. Keep them accountable. They are absolutely more than capable of remembering to do their chores at this stage, and the consequence of failing to plan their time accordingly is a valuable lesson to learn.
Don’t forget to level up those chores! The older the get, the more capable they are of helping out, so make sure their chore list continues to challenge them (and ideally teach them new concepts about the various areas of a home that require ongoing work and maintenance!)
Our oldest son helped me develop his chore chart entirely this past September (I always update the chore list at the beginning of the school year).
To facilitate this, I created a list of what I refer to as “A” and “B” chores. “A” chores are much easier, faster to do (changing bathroom garbages, helping me make dinner, unloading the dishwasher, taking out the compost bin after dinner), while the B chores are a bigger responsibility and take a bit longer (Vaccuming, cleaning his bathroom, cleaning his room etc).
I gave him the list, and the corresponding number of “A” and “B” chores I needed him to pitch in with during the week, and then he chose which ones he wanted to do. We then built an agreed upon weekly schedule for when he would do each of the chores.
During this process he decided that he wanted to double up chores on certain days so that he could have other days “off”, particularly on days he knew he would be busy with after school activities. It was a great strategy, and he’s had a much higher completion rate on his chores this year because he was able to look ahead and plan his time accordingly.
The Savvy Consumer
If you have been helping your child research their financial decisions to date, nows the age where you can start to steadily wean your help and allow them the independence to do it alone.
Just the other day our oldest decided that he wanted to buy some specialized grips for his PS4 controllers. He went onto the computer, researched the various options, decided on one he wanted to buy, and then looked at where he could get it for the cheapest price. Not surprisingly the answer to that was Amazon, so he came and got Mike, ran him through everything he had learned, and Mike helped walk him though how to make the online purchase.
He was giddy with excitement about the package arriving, and asked us no less than a dozen times if it would in fact show up on Amazon’s “guaranteed” delivery date (luckily it did!). He RAN home from school that day to see if the package arrived.
It was great to see him invest his time and energy into making a solid spending decision with his money, and also experience the anticipation of receiving the purchase. In a world of NOW, our kids often miss out on those feelings of anticipation, and frankly, that’s often half the fun.
Jobs, Jobs, Jobs
Okay so they have an income stream, which is great, but if you haven’t already, now’s the time to start talking to them about actual jobs. Jobs where they work regular hours, have to be responsible about showing up, and are accountable to a BOSS.
Not because you want to suppress your child’s entrepreneurial spirit. Maybe they are doing extremely well with their chosen income stream. But, experiencing the responsibility and demands of a job, including one where they have to communicate with a boss about availability, requests for time off etc, is a whole other source of life experiences.
Now, I’m not saying you have to make your 8 year old get a job, (but if they really want to and there happens to be something age appropriate for them to do at this age, AWESOME!) But it’s also just a great time to start talking to them about the job options they WILL have in just a few years time.
Discussing it and getting kids to turn their minds to the idea of a job translates to them expecting that they WILL have a job when they are 11, 12, 13 ish. This is a prospect that a ton of teenagers in my neighbourhood are flabbergasted at. “What! A job? Why would I get a job? My parents pay for everything I need AND want!”
Don’t let that be your kid. Talk about it, look for a variety of options that would work both for your child’s interests AND your family, and get them thinking about it early.
Great options for kids this age that build immense life skills are getting involved with officiating their favourite sport or activity. Whether it’s reffing basketball, umpiring baseball, or something similar, this is an ideal forum for them to start learning responsibility, how to make quick decisions and communicate them confidently (often to adult coaches!).
I started refereeing and timekeeping at 11, and continued well into my teens. It was a great income source. I had to communicate with the organizer when it came to my schedule and availability, I had to show up on time, be professional and responsible, and communicate clearly and confidently with players, coaches and parents alike. At 14 I ended up taking over as the organizer in charge of timekeepers/scorekeepers, tracking peoples schedules, identifying the leagues requirements, calling people to schedule them, and completing pay roll for all of the leagues timekeeper and scorekeepers. (Of course my Mom guided me through all of this!).
It was a big time commitment on my mom’s part, but it taught me immense organization, communication, accounting and documentation skills. All skills that were essential in my future career, and gave me a leg up on many of my colleagues.
So talk about your child having a job at 11, 12, 13 as though its a given. Like it’s a forgone conclusion that they will have one. This will help them shape their mindset about both a job, and work in general.
Would your child forget their head if it wasn’t attached to their body? Yah – ours too.
It’s one reason why it’s important to teach your kids to take responsibility and ownership of their belongings. Because if we continue to remember everything for them – they will be an equally irresponsible 16 year old, and that’s just plain annoying.
So start now, start early.
Insist that they take responsibility for their sports gear, getting it ready for activities, and making sure they have everything before they leave an activity. Same with their belongings at home. Our oldest has already had to part with his own hard earned cash for a basketball he repeatedly left on the street and eventually went missing.
Taking our belongings for granted, and not taking proper care of them is the opposite direction of gratitude. It leads to a sense of entitlement, and an assumption that someone else will do it/fix it for them. Not a desirable outlook to foster.
The Power Play Project
I previously wrote about our oldest participating in this entrepreneurial project at his school. It was a FANTASTIC experience (for him, and for us!)
Essentially the program requires your child to develop a product, build a business plan for the product, purchase supplies and track expenses, make the product, and then sell it at a school organized market.
If your school doesn’t offer this program, or something similar, reach out to your child’s teacher, the school administration, or the Parent Advisory Committee and talk about the program with them. Try and convince them to implement it annually. The costs of the program materials are minimal, and could easily be covered by Parent Advisory Committee funding.
If your school absolutely won’t adopt it – go onto the Power Play website and buy an individual copy of the materials for your child. Do it as an extra-curricular activity. I highly recommended doing it around a holiday (Christmas is ideal) as this will generate a great opportunity for your child to sell their product to friends and family, as well as to sign up for a table at a local craft fair.
While it may seem time intensive to commit to doing this type of extra-curricular with your child, it is an experience worth every minute of time invested (by you and your child). You will help build your child’s creativity, planning and organization, communication, sales, marketing and record keeping skills (to name just a few).
This is an optimal age for your child to engage in this type of project, and can also be a helpful way for them to realize that they are completely capable of creating income streams with their own talents and skills, increasing their confidence in their abilities and compounding their sense of independence.
The Bottom Line
These are just a handful of ideas to implement financial literacy at this age and stage. Realistically you are limited only by your own creativity and imagination at this point.
If something builds on the foundational skills of delaying gratification, charitable mindset, value oriented spending, building gratitude, developing ownership and responsibility, it will improve your child’s future financial abilities.
Thanks for reading! Next week we’ll finish off our 4 part guide with the 11-13 age range. If you have comments, strategies or suggestions for how to teach your 8-10 year old about finance, please leave them below!