Are you (financially) smarter than a 5th grader?

Confession: I’m not.

By Courtney Jordan

Truth be told: I don’t claim to be smarter than a 10-year-old in almost any category. Kids are creative, kind, and confident in ways most adults can only dream of being. But it turns out they also have tricks for counting their pennies that even full-time employees with 401ks should jot down. Younger generations are the most financially savvy yet. Although Gen Y has tuition debt higher than ever before, this group also carries less consumer debt than their parents, and makes more evaluative, informed decisions on a daily basis. After careful revision of various elementary school curriculum, I wondered how these early lessons in money management still somehow seem to escape grownups. Here are seven seemingly simple things that even 5th graders know about money that all adults should know too:

1. Divide your allowance into spend, save, and give.

Kids learn this somewhere around third grade. I’m in my mid-twenties and I still don’t designate a portion of my paycheck to deposit directly into my savings account. Of course, kids don’t have bills or the unpredictability of other adult expenses on a monthly basis, but the elementary understanding that your income should automatically splice into these three categories is an obvious first step towards effective budgeting and building savings. Additionally, accounting for charity within a portion of your overall funds is visionary and responsible in a way I imagine our world should be. These kids make $10 a week, so if they can do it, so can I.

2. There are ways to earn money that aren’t a a 9–5.

Due to a little thing called child labor laws, most kids aren’t punching clocks after school. This makes them particularly adept at finding money in places most people aren’t looking. Besides picking up extra chores around the house, kids are quick to develop side hustles: mowing their neighbors’ lawns, walking dogs, recycling aluminum cans, clipping coupons and getting the cash payout for money saved by their parents. With all the options for side hustles today, there’s hardly an excuse not to be making that extra change under the table.

3. Fun should be a priority.

Kids today are taught to evaluate a number of factors when considering possible careers, not just earning potential. Of utmost importance are: how much fun they want to have, what they consider their best skills, and the impact they can have on their community. They basically take a good hard look at their little selves in the mirror and ask just who will I be? Starting this self-discovery at a young age encourages them to pursue things they enjoy and funnels them into careers that are not just well-suited to their skills, but enriching and motivating. I can’t help but think this is the key to success.

4. Consider wants vs. needs.

Given the following list, fifth graders are asked to categorize each item as a want or a need: blanket, candy bar, video games, school lunch, and so on. If I had a dollar for every time I used the expression “I need” to describe the acquisition of items I deemed necessary as a fifth grader (baby pink Phat Farms, complete set of Gelly Roll gel pens, light-up hula hoop), I’d be rich. Maybe if I kept items as elementary as blanket in mind, I’d stop spending so much money on enzyme exfoliators or this decorative gold Dachshund that completes my leaning bookshelf.

5. Recognize when you’re being played.

Kids learn early on that stores use psychological tactics to try and get you spend and it’s necessary to be aware of these tactics in order to protect your heard-earned dollars. There are two common strategies that stores use to gain your loyalty and get you make snap decisions at the store:

EDLP: This means Every Day Low Prices (read: Wal-Mart), or the promise that the prices you’re seeing are the best they’re going to get and you don’t need to wait until a sale to know you’re getting the best deal. This works for some stores, where their customer base isn’t interested in shopping around and trusts the store to cut them the best deal up front. However, due to the confusing way our shopping psyche works, this pricing strategy has been the downfall for some major stores.

High-Low: This pricing strategy is much more common (think Macy’s or Kohl’s). This is when a store charges a high price for newer or more in-demand items and later will drop the prices to clear out inventory when the demand is lower. This strategy plays on our emotional desire to strike while the iron is hot, even if the same item is available at the “sale” price elsewhere, without the red tag.

Online shopping presents its own unique ways to jump-start your shopping adrenaline. Letting you know how many other people are shopping the hotel room you’re interested in, for example, or alerting you to low stock of an item, makes you want to quickly check out to secure you won’t miss the opportunity down the line, even though it likely will still be available.

6. Know when not to pull out the plastic.

Here’s what I learned from reading a fifth grade lesson plan: when deciding on a purchase you don’t have the cash for, do some quick mental math. Consider the total cost of the item and how long it will realistically take you to pay off the credit card payments, factoring in the interest that will be charged during this time.

For example, if you buy a $500 television on a credit card with 15% interest rate, to be repaid over five months: (500*.15) + (400*.15) +(300*.15) + (200*.15) + (100*.15) + 500 = $725

By comparison, consider how the amount of money you could save (and add to that initial $500) by putting it into a CD or high-yield savings plan. Now weigh the real value of that chunk of change.

7. Keep an easy written record.

There are lots of ways to keep track of cash these days using apps like Mint, LearnVest, or Dollarbird, but sometimes the time and energy necessary to link all your accounts and debts, and the unlikeliness of keeping to your weekly restaurants budget makes these a daunting task. Starting simple is the answer. Keep a small notebook in your bag where you can jot down your expenses throughout the day and reflect on what you’ve spent at the end of week. Allowing yourself the clarity to see what kind of money you’ve actually spent on peanut-butter-power smoothies might be eye opening enough to get yourself in check, without all the bells and whistles of apps.

Now add up all the ways kids are schooling you in saving money. That’s pretty easy math, even for a 5th grader.