As parents, one of the biggest gifts we can give our children is responsible money habits that last a lifetime. All children must learn how to make, manage, and save money to develop independence and a sense of decision-making control.
According to the 11th Annual Parents, Kids & Money Survey, over half of parents miss opportunities to discuss money and finances with their children. And a fifth of respondents indicated they are reluctant to address money concerns with their children.
How to teach your child about money
Here are some suggestions for teaching children about money:
Be a good role model
We all want the best for our children. However, this does not necessarily imply that you have to give your children the best brand-name clothing, toys, and technology. Children see how their parents spend money, including what they buy, how frequently they spend money, and whether they splurge or save. According to some experts, many children base their own financial behaviours on the behaviours of their parents. Therefore, it’s essential that you are a good “money” role model.
When to start teaching your child about money
The earlier you begin a child’s financial education, the better. Money habits and attitudes towards money are already developed by age seven, so the early your child learns about money, the better. When children reach the age of five or six, most are ready to learn about money and saving. At this age, a child can grasp basic addition and subtraction and, in most cases, knows the value difference between notes and coins.
Chores and allowances
Before teaching your children how to spend money wisely, they need to know how money is acquired (and that there is no such thing as a money tree growing in your back garden).
The only real way children can learn where money comes from is by earning it. Consider ways the children can make pocket money (assisting around the house, making their bed, feeding pets, clearing the table, cleaning the dishes, bringing out the garbage, and helping with laundry).
Open a bank account or get your child a piggy bank
Help children save by opening a bank account in their name or purchasing a piggy bank. Please encourage them to save a percentage of their pocket money towards a more significant investment.
Take your child with you when shopping
Use real-world examples to educate your children about money. Let them develop a budget for clothing and school supplies and take them with you when shopping for necessary supplies.
Let them make their own financial decisions
Allow children to make their own financial decisions. If your child wants to waste their money on items they don’t really need – or even want, allow them the opportunity to do so. Children must also learn from their mistakes and soon realise that spending all their money on something they don’t even use is bad.
Introduce bill payment
Children must understand that leaving the lights on or wasting water while brushing their teeth, wastes money. Every time they let the tap drip, or leave the lights on, subtract a small portion from their pocket money. Make a spread chart outlining where their biggest losses come from, so they can be more mindful in the future.
Plastic is still money
Even if you use a debit or credit card, explain to your children that you are still spending money. It can be challenging for kids to grasp how money is a tangible thing. Your children will be using plastic eventually, so getting them started using a debit card while they’re still under your roof is a really good idea,” says Liz Weston, personal finance columnist at NerdWallet. “It’s sort of like providing them with training wheels for learning how financial transactions work.”
