Teaching our children to be responsible with their finances is essential as financial habits are formed early. Most of what your child learns about finance , they will learn from your example. Are you sending the correct financial message? Start of on the right foot by first setting a good example of how you manage your personal finances and take advantage of every opportunity to instill great money-smart habits in your child.
As important as what you tell your child about money, it is also important to watch how you talk about it. Rather than saying “We can’t afford that”, a more positive approach is to say “We don’t buy every thing we want, we choose which are the most important things to spend our money on.” Teaching the difference between needs and wants early and how to priorities will ensure a firm foundation for their own personal finances as they grow. Setting a budget with them and encouraging them to save up for those non-necessities may seem cruel but the gratification of holding an item you saved for and bought yourself is a feeling of pride.
The lessons we teach our children greatly changes as they grow. So, when do you start teaching your child about money?
From about 3 -6 years : Introduce your child to easy concepts ….
#Why we need money
Allow them to handle the coins and notes.
Start a simple piggy bank , allowing them to save .
Let them know and understand that we need money to buy the items we want.
Play pretend store or restaurant games . Take them shopping and allow them to pay with their own money .
#Money doesn’t grow on trees
Take your child to work, show them that people have to work to earn money.
Point out the work people in your community do.
Teach them about needs and wants.
Allow them to make a wish list and help them save for an item by doing a simple chore, ie :feeding the cat.
Age 6 -13 years – At this age a child becomes aware of the value of money
#Choices are important
Have your child ask themselves questions like Do I need this ? Can I borrow it? Would it cost less somewhere else?
Teach your child to shop around and compare prices.
Your child should know that smart shopping helps your money go farther.
Set budgets from allowances .
Some parents give their children an extra allowance for toiletries , birthday parties , ect and allow their child to do the planning .
Allowances are a personal choice. These can be freely given but it is always wise to have your child earn an allowance. This prepares them for a working environment.
Amounts for allowances vary from household to household.
We have always tried to maintain a R10 per year allowance . (So , if you are 10 you receive R100 allowance per month)
Open a bank account for your child at your preferred credit provider. Most have exciting packages open to children.
Allow them to meet the bank manager and treat this visit seriously .
Show your child how to make a deposit , withdraw and how to use an ATM.
Explain the concepts of credit, interest and saving to your child.
#Savings are cool
You should save a tenth of all your incomes. If this habit is installed in your child early , they will develop healthy saving habits .
We started with two jars – save and spend . This allowed my children to see the money go into each jar and how the save jar filled up , whilst the spend jar stayed empty.
Set goals or make a wish list to stay focused on why you are saving.
# Make use of resources
In the world of technology parents have many apps and sites open to them to encourage and teach financial skills. One of my personal favourite apps for teaching finance skills to children is “mymoneymap” from Nedbank. It is designed to guide your child to work efficiently with their allowance and gain the required financial skills . Open to everyone , you do not need to be a Nedbank account holder to make use of this app.