Teach Your Child About Money by Creating an Imaginary World
When I entered adulthood a couple of decades ago, money was an absolute mystery to me – or at least the management was. Expenses such as car maintenance, water, garbage collection, health insurance, and taxes were a huge shock to me, stunned by how quickly they could use up my paycheck. And who knew food was so expensive?
I always had big ideas about all the cool things I would do as an adult, but I didn’t have a big plan for how I would fund those ideas. No one has ever sat me down or measured the actual costs of the real world line by line, so the first five or ten years of my adult life were fire indoctrination.
I want my children to start their careers and adult life with their eyes wide open. I want them to know how much life really costs before they leave home and choose a career path. So I will definitely teach them.
But I’m having fun.
I turn real money lessons into a game that I think. My children imagine the whole world based on their career goals and desires for the future. And then we substitute all the numbers as if that life were real. Think LIFE meets Monopoly meets Sims. This is how it works.
Let your child choose a career
Then direct them to a website dedicated to salary, such as Salary.com has been able , Glassdoor or PayScale, and find out how much they expect to earn in a year in this career. You can even search for a job listing that lists the salary and pretend your child has been hired for the job. Determine their home paycheck by deducting a percentage of taxes and health insurance.
Find out where they would like to live
If they find a job posting and pretend to be hired, they can use Realtor.com or Zillow to find an apartment or house near their job. Use this exercise to compare the difference between renting an apartment and buying a house. Talk about the long-term benefits of using capital to create net worth. Talk about home insurance, property taxes, and home maintenance costs. Determine their monthly rent. How much could they save if they used their home equity to renovate their old home instead of buying a newer and more expensive home?
Ask how they would like to spend their free time
Are they planning to travel? Do they imagine what they eat in good restaurants? Do they see they have roommates to help share costs? Write down their ideas and determine how much they will spend each month.
Now: it’s time to budget
We are using Kiplinger’s budget sheet . It allows you to enter income and expenses and then do the calculations for you. Ask them to complete the expense portion of the worksheet listing all of their food, entertainment, utilities, and travel expenses. Note that car insurance is usually only billed twice a year, but it still needs to be factored into your monthly budget, so it doesn’t come as an unpleasant surprise every six months (as it did for me when I recently became an adult). At this point, the game will actually start teaching your child something.
You may also think about how much it will cost your child to furnish a house or apartment by “shopping” on furniture websites and then going to the Facebook marketplace and checking out used items. How much can they save by buying a used one?
This fictional game can be both fun and reality check. Looking for a pretend job and pretending that finding a home is fun, but realizing how expensive it is to be an adult can be overwhelming. For most children, life is much more expensive than they think.
However, parents who do this exercise are setting their children up not only to be more financially aware, but also more ambitious about their goals, regardless of whether they want to make more money to fund their hobbies. or settle for a less paid career. but performs them in other ways. In addition, creating an imaginary world with your children can also help them appreciate what you are doing as a parent. And you cannot put a price on it.