It is never too early to start teaching our little ones about financial responsibility. From an early age, we show our kids how to brush their teeth and wash their hands. However, it is just as vital to equip them with practical life skills, such as money management – from the importance of saving up their dollars and cents to the prudence of spending wisely and paying off bills on time.
“Research has shown that our early experiences with, and conversations about, money can shape how we view and approach money management as adults,” says Kylie Macfarlane, General Manager of Corporate Responsibility at Australia’s Commonwealth Bank.
It may be a challenge to get little ones to sit still long enough to explain the finer details of pretty much anything, let alone financial well-being, so just like with food, it is best to start with manageable bite-sized pieces.
“Kids absorb a lot from the actions of their parents. Remember to engage your kids in your own money management like having them help with the grocery shopping, paying bills, or explaining the savings goals you have set for yourself,” says Kylie.
The key is to make it fun to keep them interested. “Generally, parents who teach their kids about money in a fun and engaging way can have a positive impact on their children’s financial knowledge, outcomes and well-being when they grow up,” she says. “As the mother of four-year-old twins, I started introducing concepts such as ‘needs’ and ‘wants’ from approximately three years of age.”
Here are a few ideas to get the conversation started.
Most young kids today grow up in a world of “invisible” money – we shop online, do our banking online and pay our bills online. Rarely handling real money makes it harder for kids to appreciate how quickly it comes and goes. Bring money to life by withdrawing some cash and using it to shop when you are out and about with the kids.
At the same time, explain to them that money does not simply come out of an ATM bank machine. We have to work to earn money and when we get paid, the boss puts our money in the bank, and the bank gives us a special card so we can take out our money through the bank’s machine to pay for things.
Ask them to choose one or two of their favourite foods at the supermarket and together, work out how much they will cost. Then ask them to pick a cheaper version of the same product and work out how much money they have “saved”.
That way, they can see how the costs can add up and that with a little effort in shopping for better prices, they can get more bang for their buck.
We live in a world of instant gratification which, unfortunately, does little to teach our children about the joys of working towards something.
Use pocket money to teach your child the value of saving from a young age. Once they have saved up enough, take them to buy the toy or book they were saving for. Kids will never forget how good it feels to work towards a goal and be rewarded in the end.
Do not forget to also show them how to keep track of where their money has gone. Record-keeping is one of the key foundations of managing money well. Start by getting your child to record pocket money or “earnings” as well as “expenses” in a notebook.
Paying bills online? Show them the amount on the bill and explain how many days/hours it took you to earn enough money to pay the bill. This will reinforce that the things they enjoy cost money that has to be earned.
“Connected” kids will benefit from learning that the internet, for example, has to be paid for like any other utility such as water or electricity.
Text: Now To Love
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- finance
- money management
- Parenting