In today’s day and age, it is vital that we teach our kids about money and the financial responsibility that comes with having money at a young age. This begins with teaching them how to handle their own pocket money, deciding whether to spend it all at once or save up for something big or to save a little for a rainy day!
The time between your child using your coins as a play toy, up until they reach their ‘teens’ is far shorter than we imagine. Yet these early years are proven to be a crucial time for instilling good, healthy habits and routines into our children’s lives.
We need to teach our children to understand the real value of money.
Regardless of how much money parents may have, it is important for children to realise that money forms the crux of our daily existence. It provides shelter over our heads, food in our bellies and the clothes on our backs. It is also essential for education, medical care and transportation. Without transport many of us wouldn’t have jobs in the first place.
These are the ‘needs’ in our lives… Then there are the ‘wants’. The ‘wants’ are not necessarily a bad thing, without them we wouldn’t have dreams and goals to chase after. However, this is where the importance of financial education begins…
Giving young children a small allowance will teach them to start making their own smart money choices. Allow them to do chores around the house or in the neighborhood to earn extra pocket money. At the same time, you want to ensure that they do not start to think that ‘all good deeds deserve money’. So, every now and again take them out to do some community work or give to a charity. They will soon learn that helping others brings them happiness and not the ‘getting money’ factor.
Start with a piggy bank, then help them open a Savings Account at the bank. A great idea is to let your kids decorate three jars: one for saving, one for spending and another for sharing. Each time they earn or receive money as a gift, help them divide the money equally between the jars. Introduce the concept of ‘saving’ so that they can save their money in order to buy that special toy or something they would like to buy that would normally be out of their price range. Try to encourage grandparents to start a savings account for your child instead of piling on hundreds of toys for special occasions.
Give children a chance to spend their loose change by playing some make believe ‘shopping’ games at home. This will improve their number skills at the same time.Alternatively, while you are out grocery shopping, teach them some smart shopping tips as you go along. Remember, your children see how you are paying at the till, perhaps they even have fun helping you swipe your card, so try to ensure you encourage the importance of cash over credit cards during these times.
High school students can learn much about the world of finance from investing in stocks or bonds. They’ll enjoy learning about the “Rule of 72” – a formula used to tell how many years it will take an investment to double.
Remember: Avoiding discussions about money only leaves children clueless when it’s time for them to handle their own finances. As a parent, our responsibility is to teach children to be knowledgeable in their use of money as they grow into maturity.