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Teaching financial literacy to children: 5 best money apps for kids

"As soon as they start asking questions about it and realize that money buys things, we need to be talking to them."
/ Source: TODAY

Remember the game of telephone? Teachers and camp counselors rounded up kids to sit in a circle and whisper to each other. By the last kid, the message was garbled and sounded nothing like the original. The goal, of course, was to teach a lesson about communication, gossiping and how group errors can become magnified over time.

And while educators and parents often resort to games of yore (played the quiet game recently?) today’s modern phone apps and electronic games can provide a much more engaging educational opportunity, especially when it comes to money.

“Money management can really be an abstract concept,” said Jennie Cogbill, a mother of three kids, ages 7, 10 and 13. “I don’t ever carry cash so trying to explain the cost and ultimately the value of things like shoes or sports equipment is tough.”

Best money apps for kids
Which one do you want to sweetheart?; Shutterstock ID 278161754; PO: Brandon for ConsumerShutterstock

Stuart Ritter, a senior financial planner at T. Rowe Price and a father of three young kids, agrees. “As soon as they start asking questions about it and realize that money buys things, we need to be talking to them,” said Ritter. “Because if we're not talking to them about money, they may be drawing the wrong conclusions.”

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By understanding key concepts like having financial goals, saving and living within a budget, kids can make good decisions today and continue making them in the future, particularly in what Cogbill calls a “give me culture.” Additionally, money management is not included in the Common Core standards although some schools do have basic money management classes.

But — you guessed it — there’s an app to give parents the tools to get started. And these apps aren’t just mindless games, they actually help kids process financial quagmires in real time.

“Apps have the ability to guide students' financial decisions when they are happening, which has been proven to lead to the formation of lasting habits rather than mere transient knowledge,” said Ted Gonder, co-founder and CEO of Moneythink, an organization aimed at helping young people establish good financial habits so they can better manage their money.

Here are some of the top apps:

Bankaroo – Free (Ages 5-13)

This app, designed by an 11-year old girl, requires a login and password and works like a virtual bank, although it’s not tied to an actual bank account. Users can input their allowance, on a predetermined schedule, and then set a goal and allocate funds toward that goal. There are options to upgrade to gold for $4.99 a month. Under that plan, a family can participate and separate money for savings, charity and spending.

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Savings Spree - $5.99 (Ages 5+)

The app’s key concepts are saving, spending, donating and investing. Money Savvy Pig hosts players through six rounds of a game show. Each round requires users to read through text that explains financial concepts like investments and saving for short-term and long-term goals. Users are rewarded with dollars, and the winner has the biggest nest egg at the end.

Star Banks Adventure – Free (Ages 8-14)

Similar to the game Candy Crush, this app features boards filled with various tokens that players can match up to save coins. The challenges get progressively more difficult and include six key lessons: setting a financial goal, saving and spending wisely, asset allocation, inflation and diversification. There are quiz questions like, “What can make it easier to reach a financial goal?” Answer options include “bugging your family for money” or “checking on your progress.”

Kids Money – Free (Ages 5+)

Fairly simple, this app allows users to input the cost of the item that they are saving for (like a bike or iPad), the amount of pocket money and gift money available (from birthdays or holidays), and then it calculates how much the mini consumer needs to save and how long it will take. It’s a good one to have on hand during shopping excursions when kids are tempted by, well, everything.

The Game of Life – 99 cents (Ages: 7+)

A throwback to the old board game (it was released in 1860 by Milton Bradley), this brightly designed app focuses on budgeting, saving and making big purchases in life like college and a house — not bad lessons to learn at a young age, said Gonder.

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“People need to learn the skills and develop the habits for daily and major financial decisions early on,” he said, “so that money can be an enabling rather than a disabling force in their lives.”

But if you are not quite ready for the app, stick to a simpler method. Audrey Brashich, who hails from Vancouver, said when it comes to birthdays, she and her friends tape a few “toonies,” or two dollar coins, into the card. The children are encouraged to split the money between a gift and a charity.

“There's an exciting trend among kids to want to donate to causes important to them and to save for their futures, which is something we want to foster,” said Brashich.