Raising financially smart kids

06.11.20

Passing on life lessons from generation to generation is incredibly important, especially when it comes to topics like money. Strangely enough, personal finance is not a subject often taught in the public school system. Only 21 states require high school students to take a course in personal finance,1 and if offered in college, they are rarely required. Understanding finances and learning smart spending practices are basic building blocks for adulthood, and yet the onus of teaching these essential life skills falls primarily on the shoulders of parents and grandparents.

To further complicate matters, Generation Z grew up in a drastically different world than generations past. It’s often necessary to view the world through their eyes so you can provide financial education in the best, most impactful way. Here are some strategies you can employ to reach Generation Z and raise financially smart kids.

The lesson of delayed gratification

Millennials have always gotten a bad rap as the instant gratification generation, but Generation Z has experienced it on another level. If they want to listen to the latest hit song, they can stream it on Spotify. If they need a new phone case, Amazon Prime can deliver the exact color/make/model they want within two days. Is a new app all the rage? Click the download button in the app store, and within five seconds it’s yours. With regards to entertainment or physical purchases, there is very little in the life of this generation that requires patience, persistence and, most importantly, time to acquire.

We all know growing wealth is not a short-term endeavor. You have to learn to sit back and wait out the natural ebb and flow of the stock market. Don’t let your kids be in for a shock when they realize not everything they want can be achieved instantaneously. Where possible, teach them the lesson of delayed gratification. If you’ve set up an allowance system, consider paying them monthly instead of weekly. Or have your child plant and care for their favorite vegetable or fruit to see the “fruits of their labors” over time, an analogy that applies directly to the world of finance.

Embrace and incorporate technology

Chances are you’ve probably had the mildly unsettling experience of watching a toddler walk up to a magazine cover and try to swipe it like a touchscreen. It’s a whole new world out there, and Zers are a part of it. They’ve never known a time without smartphones…or ubiquitous WiFi, social media, apps and laptops. Gen Zers are in their element when they’re interacting with technology. They’ve grown up using these tools to learn, make friends, buy, sell, create, collaborate…the list goes on. If you want to teach this generation about finances, you need to incorporate technology to keep them engaged.

Luckily, developers have already identified this need, and there is a slew of tools geared at teaching children — even those as young as five — about finance. Applications like Rooster Money and iAllowance lets them keep track of chores and allowance. While programs like Allowance & Chores Bot and FamZoo teach financial skills through a broad array of fun, visual and gamified tools. Using the technology they’re comfortable with and happy to spend time on, you’ll sneak in financial education without feeling like they’re being force-fed a lesson.

Focus on experiential learning

Generation Z has had unprecedented access to information from a very young age. They are always taking in information, learning to sift through what’s important and what’s not, what’s true and what’s false, and figuring out which sources can be trusted. When you say “Google” to a Gen Zer, they think of the verb first and the company second. If there’s a question that needs to be answered, mom and dad are back-ups because they believe the internet will have the answer.

Adults have real-life experience managing finances and a wealth of information to impart to younger generations. However, if you sit your kids down for an informational session, they might not be as attentive as you would hope. Instead, create experiential learning opportunities to keep their attention. Take them with you on the next visit to your financial professional. Show them how to fill out a check and balance a checkbook. Review how interest is earned on a savings account. Walk them through your family budget, and then help them set up their own. These activities will allow you to have those crucial financial conversations in a real way, and practical experience that can’t be Googled.

Virtual spending has a very real impact

Technology has done away with many of the tangible things that used to be a part of everyday life. Instead of printed maps, we turn to our phone’s built-in GPS. Newspapers are quickly becoming a relic of the past because people prefer to consume news via screens. Classic board games like Monopoly have a digital version. Even money itself has gone the way of the virtual world. Google Pay, Venmo and Paypal are just a small sampling of new — and convenient — mobile payment options they are embracing. Over half of Gen Z uses digital wallets on a monthly basis,2 and it’s not entirely off base to say they’ll see cash become obsolete in their lifetimes. When it comes to dollars, virtual is a new reality.

The convenience factor of virtual spending is enormous, but studies show using plastic means spending more — virtual spending will likely reveal a similar trend. If you want to raise responsible, financially savvy kids, it’s important to show them money isn’t inexhaustible. Get them to create a habit of checking their balances regularly. Make a game of asking them, pop quiz style, how much money in their bank account. Have them only use cash for a week or a month to see what happens. For all those apps and songs they buy online, sit down with them monthly to track their spending and show them the magic “buy” button has a very real impact on their (or your) funds.

As nice as it would be if our education system taught students how to be financially savvy, the responsibility lies with parents, grandparents and financial professionals. By teaching the next generation to be smart with their money, we are addressing a previously taboo topic and creating good financial habits before bad ones can start.

1Survey of the States. (2020). Economic and Personal Finance Education in Our Nation’s Schools. Council for Economic Education.

2Banking & Payments for Gen Z Report: The winning strategies for attracting the next big opportunity - Generation Z. (2019, March 1). Business Insider.

This information is prepared in part by an unrelated independent third party, BridgeWorks, and is provided for informational purposes only. Ivy Distributors, Inc., believes the information has been obtained from sources considered to be reliable, but does not guarantee the accuracy of the information provided.