As well as being a break from the routine, a way to experience new adventures and a time just to be together as a family, spring and summer vacations are also great opportunities to help your kids become financially savvy, says a recent article on the website Today Travel. The trick, it advises, is to involve them in planning some of the spending aspects of your trip. Vacation planning has special advantages as a vehicle for teaching money smarts, Stuart Ritter, a senior financial planner at T. Rowe Price, told Today Travel. “Parents can try to engage them in college planning and other things, but vacations are very real, very immediate things that they are interested in,” he said.
Another advantage of using vacations to learn about money is that there are ways to involve kids with different levels of financial knowledge, Ritter added. Older children may participate in discussions of why a relatively inexpensive camping trip makes sense when parents are trying to save for college, and younger children can mull over small spending decisions. “It can be like ‘Everybody gets $15 to spend on souvenirs,’ or ‘We can either eat out for dinner or eat out for breakfast and lunch,'” he said.
Laura Levine, president of the Jump$tart Coalition for Personal Financial Literacy, stated in the article that vacations are a great opportunity to teach kids how to budget on many levels. “It’s a closed-end sort of activity with a definite start and finish,” she said, meaning that bad decisions or choices have limited ramifications.
One way to teach budgeting through travel, she added, is to get the entire family involved in the trip planning: deciding how elaborate a trip will be, and what that will mean for other family expenses, like college savings or holiday gifts.
Levine explained that parents can also boost their kids’ financial literacy by giving them some vacation money and the freedom to decide what to do with it. The important thing is for parents to stick to their guns. If a child fritters away a travel allowance, parents should avoid simply refilling their pockets. And if a child doesn’t meet an agreed–upon financial goal, there should be consequences.
One key point to remember about teaching money smarts around a vacation is to do it in little increments, the article advises. Kids are much more likely to retain the information if it is conveyed at a time when it is meaningful to them. “If you do it in bite-sized chunks, it’s easier for you to have the conversation and for them to engage in the decision-making,” Ritter said, rather than waiting until they’re 17 and don’t want to hear a big, long money lecture.