Grandparents Teach, too
Economics for children pays dividends
“The best way to teach your kids about taxes is to eat one third of their ice cream cone.”–Bill Murray
Teaching economics doesn’t need to be disgusting, but it is essential. Here are a few suggestions for teaching your children about making, managing, keeping, and making money work for them.
Help children count out the exact amount of money for a taxable item and tell them they are going to learn a lesson at the checkout counter. When they pay for it, the clerk will tell children they do not have enough and must pay for tax. Digging out more money helps children remember the lesson. On the way home explain all the ways everyone pays taxes and where local, state, and federal taxes go. There are income taxes, sales taxes, gas taxes, fees, property taxes, licenses, internet, phone, utility taxes and more. Show children “taxes” on your bills.
How is the money used? Taxes pay for government buildings, parks, libraries, services like plowing roads, city, state, and federal workers like teachers, librarians, waste disposal, police, and fire workers. Family members may work for the government, receive a government payment or pension.
Young children can practice earning money and managing it by playing toy store. They can learn that businesses and people have many expenses. When finished, count the till and take out about half for all fees, licenses, personal, employee’s, local, state, and federal taxes. Then take out more than a fourth for employees’ wages and other payments, utilities, insurance, and cost of materials. What is left is theirs.
Labor equals payment
According to economists, the earlier we attach work to production and pay, the earlier we teach children the economic principle of trading labor for capital (money). No matter how small the amount of birthday and holiday money children have, set up four jars. Label them save, spend, invest, and donate. Savvy Pig on-line has divided piggy banks for sale. 3jars.com has good explanations of these principles for kids. “Whatever Happened to Penny Candy?” by Richard Maybury gives a clear explanation of economics for everyone third grade and above and the many versions of Monopoly are good economics games.
For older kids the stock market site howthemarketworks.com has good explanations. You can explain how your 401K ‘s, union, pensions, and individuals are investing in the stock market. With your help children can do a” fantasy invest” and watch a stock like Disney.
Other concepts like how compounding interest can hurt or help them, the investment rule of 72, and opportunity cost are useful. Check Google for quick explanations.
You can teach children to charge interest when they lend money to siblings. The youngest usually cleans up. For more see grandparentsteachtoo.blogspot.com; wnmufm.org/Learning Through the Seasons; Pinterest and Facebook since 2009.
EDITOR’S NOTE: Grandparents Teach, Too is a non-profit organization of elementary and preschool teachers from Marquette, Michigan. The writers include: Jan Sabin, Mary Davis, Jean Hetrick, Cheryl Anderegg, Esther Macalady, Colleen Walker, Fran Darling, and Iris Katers. Their mission since 2009 is to help parents, grandparents, and other caregivers of young children provide fun activities to help prepare young children for school and a life long love of learning. They are supported by Great Start, Parent Awareness of Michigan, the U.P. Association for the Education of Young Children, Northern Michigan School of Education, the Upper Peninsula Children’s Museum and the Northern Michigan University Center for Economic Education.