Activities to help your children manage their money
We'll show you how to give your children the advantage you wished you had and prepare them to win with money at any age.
It is never too early to teach your child how to manage money, as well as the vital lesson that financial wellness is essential for later-life independence and self-worth. These may appear to be difficult concepts for small children to grasp, but according to a new University of Cambridge study, a child’s relationship with money is formed by the age of seven. Weekends are ideal for teaching your child about money management, such as budgeting, saving, and borrowing.
“With so much going on throughout the week, weekends are an excellent time to focus on teaching your children about budgeting, saving, and borrowing money,” says Frank Magwegwe, CFP and Head of Momentum Personal Advisory Service.
“During this time, you can share your own lessons about financial wellness with your children, or you can seek guidance from a trusted consultant, especially if you’ve realised that your own relationship with money isn’t ideal and want to break that cycle for the sake of your children’s future.”
Momentum provides some helpful suggestions for teaching your children the fundamentals of financial wellness, with plenty of great recommendations and ideas to implement throughout the weekend.
Budget fundamentals: The freedom of choice
Messages are subjective and inherently reflect judgment, according to Psychologytoday.com. Lessons, on the other hand, have a neutral tone and are objective. Messages might elicit feelings of humiliation, fear, and guilt. Lessons can be empowering.
Allow your child to make difficult decisions, such as choosing between a weekend activity and a much-wanted present. This instructive moment provides two options as well as the obligation to live with the consequences within financially acceptable boundaries. The controlled choice between two acceptable possibilities creates a safe atmosphere in which your child can develop as a competent decision-maker.
Activity
Give your child two options within the same budget, such as a desired experience and a toy/possession of equal worth. Explain that they can only choose one option and that they will only be able to do so at the conclusion of the weekend if they save their daily allowance (divide the number of weekend days by the actual cost and present this amount to be saved daily).
The Marshmallow Theory of Delayed Gratification
Continuing from the initial opportunity to choose one of two purchases at the end of the weekend, teaching your child the value of choice and reward is likely the most essential financial wellness lesson he or she will ever learn. Stanford University researchers gave a platter of treats to nursery school children in the 1960s.
They told the kids that if they ate their reward right away, they wouldn’t get another, but if they waited a few minutes, they’d get another. They’d quadruple their candy if they could prolong their enjoyment for a few moments. They observed the youngsters until they were grownups and discovered that those who could delay their gratification achieved far more success in life than those who want instant gratification.
Activity
Make two jars for your child’s money. One jar will be labeled “spending,” and it will include the weekend daily allowance, allowing them to see their money grow on a daily basis. The second jar is labeled “saving,” and it contains the money received for completing tasks.
Every time your child adds money to the savings jar, let them count it and discuss how much money they still need to attain their weekend goal. You might add money to the savings jar on a regular basis to explain the joys of postponing spending and to introduce the notion of interest. Your youngster should be offered the option of using this money towards more expensive goals and subsequently opening a bank account to save and earn interest.
Weekend debt: Avoid costly mistakes
“Debt and poor financial decisions have become synonymous with maturity as a result of gaps in financial education at a younger age,” says Magwegwe. Introduce the concept of debt to your children now that they are earning money by completing chores, in order to prevent harmful debt habits later in life. It will take time to learn the consequences of their actions, but the ‘weekend mode’ expectation of receiving more stimulus and amusement than normal is a great place to start.
Activity
When your child asks for a weekend outing or purchase, give them three options:
- Purchase it immediately (with money from the spending jar)
- Purchase it later (with money from the savings jar)
- Borrow money from your parents
Children will first choose the debt choice since they have not yet realised the implications of debt. Create payment conditions for this option and treat it like a regular loan with interest.
