When your children are ages 8 to 13, it's a wonderful time to start adding variety to the way you financially educate them. At this age, you can introduce concepts like budgeting or even investing. Children ages 8 to 13 are usually very familiar with technology, so using online applications and other financial age-appropriate online tools will help them assimilate money concepts very quickly.
If you want your children to turn out well,
spend twice as much time with them,
and half as much money.
— Abigail Van Buren

Commitment, consistency and providing real life application is what will help you drive the message and help it stick for the years to come.

Introduce them to the dreaded word "budget"

Mark each envelope with the name of the spending category. Use the envelopes to allocate all future income your child receives. When the money is gone, that means no more spending!

Understanding the concept of living within financial limits is very important. Instead of using the word "budget," talk to your child about having a "spending plan" for their money. Sit down with your child and help her put together a simple financial plan that would include both needs and wants items. At this stage their spending plan will have very few categories, but once they grasp the concept, they'll use it and expand it with age. If your child is not tech savvy, use the traditional paper envelope approach. Mark each envelope with the name of the spending category. Use the envelopes to allocate all future income your child receives. When the money is gone, that means no more spending!

If your child is well versed in technology, there are great free online apps, such as Mvelopes, to make this process easy and fun. Once your child reaches an age where it makes sense to open a savings and a checking account, using an online application that links directly to their bank accounts will be a wonderful tool for tracking their money.

Introduce them to the simple 10-10-80 money rule

Whatever "income" they earn, teach your child to save 10 percent, designate 10 percent toward a charitable cause of their choice and to live on the remaining 80 percent. This simple money rule will cultivate in them the habit of regular saving (which is one of the secrets to long-term financial success), to be generous (those who give tend to lead much happier, content lives) and to live within their means. This is a great way to practice math and percentages as well! The sooner you get them accustomed to the idea of spending no more than 80 percent of their money, the better off they will be in the future.

Have fun with a 15-day waiting period on major purchases

First, set a dollar amount, which will constitute a "major purchase," then apply the 15-day waiting period to anything that exceeds the set amount.

Major purchases will have a completely different meaning to an 8- to 13-year-old than to us adults. The principle, however, is the same. In order to teach your child about the dangers of impulse buying, implement a 15-day waiting rule on purchases. First, set a dollar amount, which will constitute a "major purchase," then apply the 15-day waiting period to anything that exceeds the set amount. Fifteen days can feel like an eternity to your child, so make it fun. Go on an online "bargain" hunt and see if you can find the item your child is looking for at the best price. Create a fun reward system for each day of the waiting period, and most importantly, talk to your child about the value of patience and contentment.

Investing basics

Investing can be a complicated topic, but there are ways to make it simple and fun, especially at this age. First, talk to your child about different ways to "grow" their money and the difference between short-term saving and long-term investing. Show them simple numerical examples of what returns a long-term interest bearing account can have on the bottom line. You can use Skittles instead of money to illustrate the power of accrued interest over time!

money investment concept money growing

Introduce your child to simple ideas of risk when it comes to investing and talk to them about diversification concept — dividing their investment money into five to seven different options to mitigate the risk.

One very practical way you can teach your child about investing and risk is to designate a specific amount that you and your child will be able to invest together. Have them read/research simple concepts like a CD, money market account or a mutual fund. Once they've researched and understood a few of the options, allow them to choose the investment path and have fun watching the fund grow!

Now that we've covered basic financial principles, let's look at the creative ways to help your 8- to 13-year-old generate income.

This age group is where the real fun with creative income generating opportunities begins. It's also perfect for observing and learning whether your child has a natural entrepreneurial spirit.

Good old-fashioned yard sale with a twist!

Ask your child to choose toys they don't play with anymore and clothing they don't use as items to be sold at a yard sale. Work with your child to put together a sale, have them work it from start to finish, then apply the 10-10-80 rule to divide the proceeds. To make it fun, you can issue a "matching" challenge where you'll commit to matching a certain portion of the income if your child generates an agreed upon amount from the sale.

Refreshment stands

girl-with-lemonade-standDo you live in a neighborhood that does neighborhood-wide yard sales? How about doing a refreshment stand during the yard sale? You can decide to invest $20 to $30 to purchase muffins, coffee and other breakfast items and your child can tend the refreshment stand. After the sale, recoup your investment and allow your child to keep the remaining proceeds. This will be a great lesson on investing and generating returns.

Ice pops on a hot day! If you live in a neighborhood that has a community pool, ask about the possibility of your child running a poolside refreshment bar with ice pops, lemonade and cookies. This is another great way to engage them in creative income generation and honing their interpersonal skills. This time you may encourage your child to invest a portion of their saved money to teach them about investment and risk.

As you can see, the possibilities are endless. One thing's for sure. Once your child tastes the power of earning money, there will be no stopping them! So encourage their entrepreneurial spirit, encourage them to take calculated risks and try out their ideas. Support and cheer them on while teaching them solid financial wisdom. All of the lessons learned at this age will pay great dividends in the future!

Get financial tips for kids between 4 and 7 years old >>

About the author^

Steve Smith author headshotSteve Smith is the CEO of Finicity, the maker of Mvelopes budgeting software. He has strong strategic and tactical business skills and combines them with a passion to develop products and services that make a positive difference in people's lives. Prior to co-founding Finicity™, Steve served as a senior member of the executive team at Megahertz Corporation, the world's leading supplier of data communication products for mobile computers. At the close of his nine-year tenure, Megahertz had more than 1,200 employees and claimed more than 50 percent of the North American PC Card market. Most recently, Steve led the acquisition and management of an industrial engineering and manufacturing firm with offices in Canada, Europe and the U.S. Under his direction, the company became a leading supplier of critical service control equipment for chemical and petrochemical plants. Steve holds a Bachelor of Science degree in Finance from the University of Utah.

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