Foster Kids: How to Ensure They Still Get a Financial Education

Foster children have very specific needs when it comes to learning about finance because they typically don’t have the same resources available to them that biological kids in stable homes do. These children shouldn’t be left by the wayside.

Foster children often come from homes where money was scarce or the source of conflict. They might not be as open to talking about money because they associate it with fighting and anxiety.

What to try: Talk about money regularly and make it a routine part of the day so they come to understand that not all money talk leads to a fight. Ask them what they think about basic things like decisions in the grocery store so they learn that their opinion on money matters.

Some foster children have a history of stealing or other unethical money-related behavior because of the circumstances they faced at home. Some foster children engage in these activities because their biological parents did. Others were forced into it to get basic necessities.

What to try: Give your child a list of chores he can do around the house to earn extra cash and give plenty of praise for a job well done. Reinforce clear consequences for breaking money rules.

Many kids in the foster care system never have been trusted with money. Many foster children come from families in which there simply was not enough money for an allowance. They often never have had the chance to invest, save, set money goals, buy themselves treats, or give to others. The lack of trust does not stop with money, as about a third (32.9%) of foster kids have been abused in some way.

What to try: Present your foster child with a regular allowance. Let him choose how to spend the money, but be clear about the consequences about when the money is gone. Make your foster child part of the budget planning process for the family, and give him a small amount of the money to manage, such as that for entertainment. Try to match whatever he saves or gives to charity. Be patient and understanding if your child gets overwhelmed by how your trust makes him feel, hearing him out if he’s willing to talk.

Children who are in foster families usually have a limited amount of time in which to learn and practice money principles. Even when they learn, the rules quickly can change as they are bounced from home to home, creating confusion. A survey by the Midwest Evaluation of the Adult Functioning of Former Foster Youth found that only 25.1 percent of foster kids have only one placement. The majority have two or more homes, with 16.4 percent reaching seven placements or more.

What to try: Ask your foster child the different money approaches or principles he’s learned so you know what to avoid rehashing. Explain the rationales for the systems you use and discuss the benefits and drawbacks it has compared to others your child might have been exposed to. Focus on practical, everyday skills like budgeting and reading bank statements before you worry about the more complex tasks such as investing, and let your foster child work hands-on whenever possible.

Legal constraints interfere with the ability foster children have to establish themselves financially. In most states, minors need a co-signer for most financial accounts, including those at banks, because of contract law. Without the ability to have a bank account, children in foster care are limited in their ability to learn about and earn interest, and they cannot practice things like using debit cards or balancing a checkbook.

What to try: Buy interest-bearing savings bonds in your foster child’s name. Have your child help you with your own accounts, and get him using prepaid debit cards. Also investigate organizations such as Opportunity Passport, which will provide financial education or match your foster child’s savings.

The limited amount of time kids are in a foster home often makes it hard for them to be in one place, get a first job and get an education that will provide good employment later. According to Children Uniting Nations, about half (51%) of all children who age out of the system are unemployed. Only 3% go to college.

What to try: Introduce your foster child to online education programs, which he might be able to continue regardless of where he goes. Encourage them to volunteer with local organizations so they still can get good recommendation letters even if they are not employed. Make sure he knows about programs such as the Supplemental Nutrition Assistance Program (SNAP, formally known as food stamps) that can help him stay afloat if he has trouble.