My name is Megan DeCrosta and I am the creator of CutTheFiscalFat.com through which we teach financial literacy to teens and young adults. I created Cut The Fiscal Fat because fundamental and essential information regarding money, credit, and finances is not something that is mandated in schools and hardly talked about at home, if at all. 
I grew up in upstate New York in a lower-middle-class family of six. While my parents worked hard to provide us with a good life, they had poor financial habits. My parents didn’t particularly try to discourage those habits in me either. Then when I was 15 years old my father was killed leaving my mom a single mother of four kids, with me as the oldest. We had to sell our family home and scramble to try to cover the expenses of his sudden death.
Towards the final years of my father’s life, he very much lived with the mentality that “you can’t take it with you,” and I, in turn, repeated that same behavior. Maybe it was because I idolized my father after his death. Or perhaps it was because my mother never knew or tried to correct my poor financial practices.
It wasn’t until I met my husband Eric, and learned of his exceptional credit and money habits, that I realized how much I didn’t know when it came to money, finances, and credit. I always found myself saying, “I wish I knew this sooner,” and “Why didn’t anyone ever teach me this?” I became upset with my parents for not teaching me better until I realized they couldn’t teach me what they didn’t know themselves.
Then the ultimate question came, “Why didn’t I learn this in school?” Which led me to create the website and our online course to teach financial literacy. We designed the Need To Know Life Guide (Level 1) to be a fun, engaging, and easy to absorb introductory course to personal finance. Intentionally created to inspire further self-education in all aspects of money management, especially finance.
We wouldn’t let our teens drive without knowing how a vehicle works and the rules of the road. How can we let them get credit cards and student loans without knowing how finance works?
Here are my top 10 tips to get kids started in learning the importance of money:
- Start them on a working allowance: Create a list of tasks that are outside of everyday chores and assign a dollar amount to each task. Your child should not expect money for doing simple day-to-day chores, but they can earn money. The more tasks they complete, the more they earn!
- Establish the “pay yourself first” concept early on: When your child earns money or is gifted money, take a portion of it and put it into a high-yield savings account for them. Let them know you are doing that and it’s non-negotiable.
- When you go on vacation give your child a preloaded Visa card: Allow them to use that money how they’d like while keeping them updated on their remaining balance. This helps them start budgeting their own money and learning to prioritize purchases.
- When you go to amusement parks, fairs, or farms allot your child a specific amount of cash: Give them their own wallets (that you can hold onto for safekeeping) and allow them to make their own purchases like snacks and gifts, or more ride tickets. Make it a hard rule that once they are out of cash, they do not get more. On the flip side, if they have money left over allow them the choice to add that money to their (high-yield) savings account or to roll it over for the next outing.
- Establish a spending-saving-giving system: You can use jars to give your child the opportunity to physically see the money accruing or you can set up accounts for your child to start a checking, savings, and second savings account for giving. To help mold a child/teen into a money confident adult, you’ll want to instill the value of giving.
- Be the good financial behavior model: Kids catch on to more than you think or you’re even aware of, and that includes impulsive financial behavior. Don’t go by the cliche “Do as I say and not as I do.
- Create savings goals: Sit with your child and write down some savings goals for them to accomplish (you can also create a vision board for their room). Some savings examples include having more spending money for an upcoming vacation, wanting a new phone or gaming console, and/or needing to save for a car.
- Start talking about taxes: Some parents can get their kids used to paying taxes by deducting a small percentage from their earned money. Added parent bonus: Take their deductions and add them to their savings account.
- Talk about predatory lending when you see it: When you drive by “guaranteed approval” or “get cash now” establishments point out how they take advantage of vulnerable people with poor credit scores. You can simulate with real money or play money at home the interest a borrower has to pay at a place like that.
- Credit is power: Go over the importance of having a good credit score and help your child learn to establish their credit. If you don’t have good credit, go over your score and celebrate milestones together as you work to improve it.
