Bringing up money-savvy children

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By Karen Jordaan

Knowing how to manage money is a lifelong skill – one that will see our children through good and bad times. But it’s a skill that should be taught from an early age. Financially responsible adults don’t just emerge like butterflies at the age of 18, they need a little help to find their wings. 

Some schools may do their bit to teach financial literacy, but it’s ultimately your guidance that’s needed. 

1. Let’s talk money 

“Not in front of the children”. 

Many parents may well say this when family finances need to be discussed. But to nurture a child who’ll be in good financial shape as an adult, it’s really worth starting the conversation early – without, of course, bringing up any real financial worries. 

So, consider chatting with the kids from an early age about routine purchases (food, energy), and paying for education, transport, and holidays. Discuss the difference between the things you need such as food, shoes, water, heating, and the things you want - holidays, iPads and the latest trainers. 

When they’re young, take them shopping, look at the price labels and pay for items with cash, rather than paying with a seemingly ‘magic’ credit or debit card. Cash is a tangible thing - once it’s used, it’s gone. Kids need to learn that. 

2. Introduce them to money 

As soon as your child can count is the time to introduce them to money. Show them notes and coins and teach them the value of each one. Best of all, play some money games with them – engaging games to help them understand the value of coins, how to count money and work out change. 

You can play these games online or as board games. Monopoly is an old favourite that not only gets children handling money but also teaches them the basics of investment. You can also create your own homemade games. After all, what child doesn’t love setting up and playing shop? Play and learning really can go hand in hand. 

3. Get them budgeting 

Whether your children earn their own money with an after-school job or get gifts and pocket money from you, it’s worth introducing the idea of budgeting early. And make it fun! 

Yes, budgeting really can be fun if you draw up a colourful chart for them to fill in. Two columns: ‘money in’ and ‘money out’. 

For younger children, they can put their money in three different money-out piggy banks – money for spending, for sharing/gifting, and for saving. 

By budgeting, your children will begin to take more personal responsibility for managing their money. 

4. Start them saving early 

It’s important to teach your children that however much money they may be given or earn– they don’t need to spend it all at once. Far better to set some goals and save for the future! 

So, help them open a savings account - a digital savings account may be best. After all, our children will be doing most of their banking online in the future. The earlier you get them managing their finances on a computer, tablet, or mobile phone, the better. 

Once they have a savings account – you can look at the monthly statements with them – and explain how the account grows because of deposits and interests. Encourage your older children to put larger sums away for something they really want - like a new bike or computer. 

By saving your children will learn how rewarding self-discipline and goal setting can be. 

5. Working for the things they want 

When your child sets their heart on anything from a book to a bike, instead of instantly reaching for your credit card – encourage them to earn the money for themselves. No one wants work interfering with their studies or play, but there are small jobs your child can do to earn a little and pay for the things they want. 

Young children can top up their piggy banks by doing household chores. Tweens (10 to 12-year olds) can do paper rounds, babysitting, or gardening. And older teens can get part-time work in shops and restaurants and holiday work in holiday camps etc. The benefit of this? To give them the responsibility and self-satisfaction of earning their own money and saving from a young age. In this way, they can really understand and begin to appreciate the value of money. 

6. Spending, not overspending

Now comes the really fun part. Once your child has saved the right amount, they can go shopping and then spend their spending budget. Of course, advise them not to overspend. But as long as they’re mature enough, it’s best to leave the purchase decisions to them. They really need to be in control of their own decisions when it comes to money.

If you help them become smart spenders, you’ll instil in them some valuable lessons about how personal choice relates to managing money.