While you’re teaching kids about money this week, we won’t ask you to shell out any more candy… this time. However, nobody ever said that helping your children learn these life skills would be easy. We’ll be asking you to step out on a limb this week, but it will help your kids understand the value of wise decision making skills.
The value to your kids of wise long term decisions
Specifically, we’re going to be talking about the virtues of long term wisdom (wise choices) vs. immediate satisfaction, and how that relates to the financial concepts of opportunity cost which we discussed in last month’s post.
For Elementary / Middle Schoolers:
- Offer the kids the opportunity to play outside or watch a movie — instead of doing homework. (Remember when we said you might be going out on a limb here?)
- If they choose playing or the movie, one teaching strategy can help them to understand the opportunity cost of their decision. In this case, it would be falling behind in their studies.
- Have them ask the following question out loud: “Based on my future hopes and dreams, what is the wise thing to do?”
- What is their answer?
- Offer the kids the opportunity to watch a movie or play video games instead of doing homework.
- If they choose the movie or playing video games, have them explain the opportunity cost to you with the following question, tuned for older kids: “Based on my past experiences, my current circumstances, and my future hopes and dreams, what is the wise thing for me to do?”
Tips for Parents when teaching this money skill:
The big idea here is asking the right question when making this decision. It isn’t necessarily about what’s right or wrong, or what is “technically” against the rules you or society has set forth.
The key, and the right question should be: what is the WISE thing to do? Kids, both younger and older, need to consider opportunity costs to answer such a question – leading to a greater understanding of these concepts as they relate to both finances and their future as a whole.
Of course… make sure you’re prepared to reward the kids that choose to do their homework instead!