VCU economist’s new book, ‘Teach a Kid to Save,’ is truly a family affair

When one of his young children asked, "Can we lower the tax rate this week?" Stephen Day knew he was doing something right.

Day, Ph.D., an associate professor of economics in the Virginia Commonwealth University School of Business, is director of the VCU Center for Economic Education - and education starts at home. There, he has set up a mini-economy for his four children, featuring "jobs" (read: chores) such as zookeeper, landscaper, chef's assistant and ruler of the toys. His kids earn a play-money income, make a plan for their earnings, shop at the household store and even create their own businesses.

The mini-economy gives his kids a chance to practice making meaningful choices about money and work, helping them build healthy lifelong habits. And Day has been sharing these insights - first through his "Paper Robots" blog, and now through his first book on the matter. "Teach a Kid to Save" has just been published, and it features proven methods from insights from economics, education and psychology - not to mention a little trial and error - for families to follow.

"I started writing the 'Paper Robots' blog at the same time I was working on the book," Day said. "It helps get families talking with each other about teaching kids money habits. I hope it helps change the culture so that money is something we become more comfortable talking with kids about."

Day, who also works with the Virginia Council on Economic Education, noted how "some of the toughest choices we make in adult life are about money, and so often we feel uninformed, unsure and ill-prepared. We want better for our kids, but how do we teach them the things we never quite learned?"

VCU News caught up with Day to get tips and insights into how easy and fun it can be to teach kids about saving.

Why write this book?

I wrote the book because I believe in its thesis: Kids need practice making meaningful choices about money over time.

It's tough for parents to model good financial behaviors. Sometimes they don't know what to say. Sometimes they aren't proud of their financial situation. They might have grown up in a household where money wasn't talked about. But even if parents are good at teaching about money, their kids still usually don't get enough practice making choices about saving, spending, giving, investing or starting a business.

My book shows parents how to set up a household mini-economy so their kids really get to practice money skills.

So economics can actually be fun?

It's fun because you can teach it with games, simulations and everyday choices. If you've ever taken a step back and thought, "Why did I just do that?" then you can see the intrinsic value in economics. When we use the tools of economics to learn about our day-to-day choices, then we come to a lot of counterintuitive insights that help us in everyday life.

How has having your own family influenced how you teach economics?

I have four kids, and we started teaching them about money using a mini-economy about six years ago. Everyone in the family, including parents, has jobs, businesses, gets paid in play money and shops at the house store and each other's businesses.

You learn so much about your kids when you see their money and work habits! My 13-year-old saves for big goals, my 10-year-old saves just to pile up the cash, my 8-year old loves to buy experiences, and my 6-year-old is a big spender on stuffed animals - she's the one that has struggled to learn about saving!

There's no shortage of financial literacy books for kids. How is "Teach a Kid to Save" different?

There are a lot of great resources out there, but I saw a need for a family-based system for getting kids real practice with money choices.

Think of all the things your kids get lots of practice with: maybe art, reading, video games, sports. Money probably isn't one of those things. And when kids do get experience with money, it's usually about spending but not investing; consuming, not producing. Setting up a mini-economy allows kids to practice using money as a producer and investor.

Why do we need to learn how to save?

We need to learn how to save because saving is more about habit than head knowledge.

If there were only one thing you could teach people - of any age - about saving, what would it be?

Automate your budget. Each month your bank should debit money automatically to your savings, investments, other savings, bills and donations. The money that's left over is what you can spend.

Don't trust your willpower for saving. Make it automatic. Our mini-economy includes that, too! The kids have to save, give and pay taxes before they can spend.