Financial guru Suze Orman shares her best tips for making a difficult topic easier for kids at any age
child finance
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PEOPLE’s Real Tips for Real Life presents practical answers to some of the most commonly asked questions around finance, employment and preparing for the future—even when that future can seem very uncertain.

When Suze Orman’s niece Sophia was 5, she swallowed a penny.

“It’s okay, Aunt Suze, it was just a penny,” Orman remembers the little girl saying. But her aunt saw an opportunity: She asked Sophia’s mother to go to the bank and withdraw nothing but pennies. The next time the girl and her mother went shopping, her mom paid exclusively in pennies.

“Sophia learned the value of a penny,” says Orman of the Women & Money Podcast and the recently released Finance App (download it for free at iTunes and Google Play).

Though conversations with kids about money are tough at any time, the coronavirus pandemic has opened up new opportunities to initiate these discussions – whether that’s for a reason as simple as everyone being home and cleaning out closets together, or for one as difficult as job loss and having to cut way back on nonessential spending.

To help you get started, Orman has a children’s book, The Adventures of Billy and Penny (download it for free here). And she also has some exercises and games to make money smarts feel manageable and digestible for kids from ages 2 to 22.

Suze Orman
| Credit: Marc Royce

Lesson One: You don’t have to spend money to have fun.

Orman’s niece, Alexis, recently mentioned she was heading to the store to buy crafts, art supplies and toys to entertain her kids during the quarantine.

“I said, ‘Oh no you don’t. You are not going out,’” Orman tells PEOPLE. “’You are going to stay home and figure out how to entertain these kids with things you already have around the house’.”

“Be creative,” she says: There are a zillion Pinterest toilet paper-and-empty milk-carton crafts. Now is the time to “upcycle.” Have a camp-out in your back yard.

Most importantly: Don’t spend any money right now that you don’t have to spend. Even though you may be tempted to order the super-expensive Lego set to buy yourself some peace, don’t. Instead, explain why you’re not buying new toys in a way that makes sense to young ones.

“You cannot say to kids, ‘We cannot buy that right now; we do not have any money,” Orman says. “[Instead] say to them, ‘One day, maybe we can do that again. But right now, everybody is staying at home. [Our family] is safe and sound in the house.’”

Celebrating a birthday? Have a cake and ice cream Zoom party. When Orman’s nephew, Elliot, recently turned 6, he sat in his driveway while his friends drove by and sang Happy Birthday from a safe, social distance.

“That shows creativity, that shows love, that shows how to do something that really doesn’t cost any money,” Orman says. “And all of that starts to teach your kid values.”

Lesson 2: Declutter your home, while teaching kids not to waste money and to spend smart.

Use your time at home to empty toy chests, closets and storage bins. “Bring it all out,” Orman says, and pile everything that you haven’t used in at least six months in the center of the living room.

Instead of just trashing the things that don’t spark joy, Marie Kondo-style, give it a Suze Orman twist: Put price tags on everything, estimating what you paid for them.

Have one family member get out a calculator, play the banker, and add up how much each person’s discarded items cost. Then discuss the total with your kids, and ask your kids if they think they got their money’s worth out of each item. What was the cost-per-use?

Next, ask if they would rather have the money in their piggy bank, as opposed to a pile of stuff they no longer want. “They will say yes,” Orman says – a valuable lesson.

Do not put the mountain of rejected items back into your closet, Orman says. There are still some charities that are taking no-contact donations. Find one, or wait and donate after the pandemic: “This teaches children that it’s a great thing to help others that don’t have as much,” Orman says.

(And remember to get a donation receipt for next year’s tax return – which teaches another lesson: “It’s a really great thing to get a tax write-off,” Orman says.)

The main concept this decluttering exercise teaches is shopping smart in the future.

When you’re able to shop with your kids again, remind them about the experience and ask if they foresee using the items in six months. Put items on hold for a week, Orman says, and see kids still want it a week later. (They may completely forget about it!)

And no need to wait to put it into practice: If you’re doing all your shopping online for the time being, put an item in your shopping cart, wait a week, and see if they still want it – if they don’t, hit delete and save the money.

child finance
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Lesson 3: Deciding whether to save, spend or share money.

Did you receive a stimulus check? Include your kids in the decision about how to spend the money.

If you still have a paycheck coming in, have no debt and have ample savings (by this Orman means an eight-month emergency fund if you're working, and a three-year emergency fund if you're retired), you may not personally need the stimulus money.

“Ask your kids, ‘What should we do with this money? Do we need it? Do you need it? You have a choice. Do you want to give [some away]? Do you want to keep some? What should we do with it? Have a conversation with them about it.”

Many families, however, truly need the stimulus money to survive. In that case, have a very different conversation with your children.

“If you need every penny, talk to the kids about it,” Orman says, and ask your children which bill they think you should pay first.

“This is the time to teach your kids about what it costs to run a household,” Orman says.

Lesson 4: Real-Life Home Economics

Add “adulting” lessons to your homeschool curriculum: Teach kids how to execute a household budget and how much everything actually costs.

Make it fun by playing Price is Right: Home Budget Edition, with cards that have a symbol for every bill you pay. Try a lightbulb for the electric bill, or Baby Yoda for Disney Plus.

Ask your kids write down their best guess about the costs of everything you spend money on. How much is Netflix? How much do you spend on groceries?

Then, show them the real budget, Orman says, and explain how money is earned: “You can work for money, or you can save money so you have more money.”

Right now, because your kids can’t do things like pick up extra babysitting jobs, help them get creative with ways to add money back into your accounts. Challenge your children to help you lower the bills, Orman advises, and then split the money they helped you save into their savings account.

If, for example, you have two kids, and they help you knock $50 off your electric bill next month by turning lights off when they leave the room or not blasting the A/C, they would each get $25 in their savings account. If kids see a literal payoff, you might not have to hound them to be mindful of their energy usage. “They can start making money by decreasing the bills,” Orman says.

Lesson 5: Teaching kids to work for their money, negotiate a fair rate, and do good work.

Orman hates kids’ allowances. When she talks to children, they often tell her a sibling earns a bigger allowance — not because they did more chores, but simply because they are older.

“You’re not entitled to money, just because you were born,” Orman says. “Here’s how the real world works: You work for your pay.”

Sit down with your kids, and together, make up a list of chores, and ask the kids how much they think each task is worth.

When your child completes a task, help them value their work. If they did a sloppy job, tell them why you don’t think they earned the amount you agreed upon for weeding that garden or cleaning the bathroom. If they did a spectacular job, and they’re undervaluing themselves, then give a bonus, Orman says.

When you create the job list, vary the prices, Orman says. There should be a variety of $1, $3 and $5 jobs as well as $10 tasks. Don’t let kids only pick the big-ticket items, Orman says. Make them start off with the lower-paying jobs.

“In life, you have to work your way up,” Orman says.

These exercises teach kids that if they want money, they must negotiate a fair wage, know their value, and to put care and effort into their work.

The money expert says the pandemic can inspire conversations “about money with children in every aspect of their lives, from what they spend it on, to what they think they’re worth, to getting rid of things,” Orman says. “Teach them money smarts and how to value even pennies.”

Lesson 6: Teach Your Kids to Live Debt-Free

This is also a great time to reset and change your family’s spending habits. You can’t eat out. You can’t go hang out at the mall, or browse Target to kill an afternoon.

If you are drowning in credit card debt, sit your kids down and talk to them about it. Tell them how much money you’ve been spending to maintain their lifestyle. Ask them how you can spend less money and live debt-free in the future. What do they suggest you change?

“Let’s make it a goal to live a lifestyle that we no longer put on credit cards,” Orman says. “These are things you can now teach them.”

Lesson 7: Paying for School – and Tackling Student Loan Debt

If your child has a full scholarship to college – or you have saved for his or her whole life (perhaps in a pre-paid college plan or 529 from the time they were in diapers) and can cover all the expenses without taking on any debt – that’s wonderful. “Mazel Tov,” Orman says. Skip this section.

But if you have a child home from college and you have taken out student loans, sit down and talk to them about how much it really costs to send them to school — from food and housing, to books and tuition.

“All I ask, at this point, is that parents and children get together, and realistically look at what it is costing to send your kids to school,” Orman says. “If something happens to you, the parents: How are you going to pay those loans?”

For graduating seniors with large amounts of debt, and facing a difficult job market, Federal Student Loans are currently going to be postponed until Sept. 30, Orman says. What is their plan to begin paying them off if they haven’t secured a job by then? Are there other opportunities for loan repayment they haven’t considered?

It’s not fun to sit down and talk to your kids about how they will pay off student loans if – worst case scenario – both parents die of coronavirus. But Orman always advocates planning for the worst, and hoping for the best.

While very serious illness is the most horrible thing to prepare for, many families are also dealing with the extreme difficulty of job loss in the pandemic-affected market, and don’t know how they will pay the student loans they co-signed: “Thousands of people have written me, ‘Will the Parent PLUS loans be forgiven?” Orman says; they won’t.

For families looking at college options going forward, expensive private schools are great if you can pay them off without accruing lots of debt, Orman says, “but if you can’t, do not think that you are a bad parent because you can’t send your kids to schools you can’t afford.” Her own success makes her firmly believe that the name of the school does not guarantee future success.

The Takeaway

“What you really want to come out of this experience is the fact that you’ve got to spend precious time together,” Orman says. “You got to eat together. You got to talk with one another about things you probably never talk to your kids about. And you have now taken this time to teach them — above all else – family, and people that you love, are the most valuable entities in your life.”

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