Most of us make sure our children learn how to read, write and make good life decisions to prepare them to become responsible adults. What most parents - and most schools - don’t do, is teach kids about money.
In many families, finances are a personal, private matter not to be discussed. As a result, children leave the nest without the essential skills they need to be financially secure and successful. Whether it’s out of ignorance or fear, this lack of communication perpetuates the cycle of ignorance when it comes to money skills.
You don’t need a degree in economics to teach the basics of money management. A few simple but valuable principles can go a long way in helping your child learn about financial responsibility. The information can help ensure they become self confident, economically independent adults.
What should you do?
Start Early–
Children can grasp basic money concepts by the age of 3 or 4. Once your kids are old enough to count you can begin talking to them about earning, spending and saving. Young children learn early on that money buys them things they want. Teach them that money is what’s valuable, not the toys it buys.
Teach Saving–
You can start by keeping coins in a jar or piggy bank where your child can visually watch their money grow. As they get older, take them to the bank and open a savings account in their name. Having kids set a goal of saving for something specific gives them the opportunity to learn delayed gratification and experience the satisfaction of reaching their goal.
Give an Allowance–
How much depends on the age of the child and what you feel comfortable with. You can assign household chores as part of the allowance to show how money is earned. Some families require a percentage of the allowance go toward savings and charity, and let the child decide what to do with the rest. Regardless of how you set it up, an allowance gives your kids practice handling and making decisions about money.
Share the Household Budget–
Routine things like grocery shopping and bill paying are great opportunities to teach children money concepts. Have them compare prices in the grocery store and show them the receipt. Let them see the bill for your mobile phone and talk about monthly expenses like car insurance and petrol. Sharing your budget will help illustrate the differences between wants and needs and how you make choices about money. When your kids are about to go out on their own for the first time they’ll better understand the expenses involved and what they can afford.
Encourage Older Kids to Get a Job–
An allowance doesn’t have to be the only way for kids to earn money. Start with a lemonade stand or let them sell toys they’ve outgrown at a yard sale. Depending on age, your kids might do yard work for neighbours or offer babysitting services. By holding down such jobs, kids learn about working, earning, saving, and investing money. It also gives them a sense of pride and self-confidence.
Teaching your children to manage money is a parental responsibility that will safeguard their future. By starting early, your efforts will bring them lifelong benefits.
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