One of the most important skills your child needs is the ability to handle money. Unfortunately this is a topic not covered in great detail at school so it is up to parents to deliver the lesson. Fortunately, even though you’re going to be talking money, you won’t have to spend it doing so. This article will highlight what you need to teach your kids about money and then reveal some tips about how to do it. At the end of the article will be some helpful websites to visit, some for parents and some for kids.
What to teach:
The NZ Herald recently reported on a British study that suggested that children’s money behaviour was set by the age of 7. The Australian Securities and Investment Commission’s website suggests that you start teaching your children from a young age and have a handy guide to what you should be teaching and when.
So as you can see, it’s best to start early. Preschool children need to be introduced to the concept of money, what it is, how to earn it and why you need it. At this age you could also start teaching them about the differences between needs and wants. Once they start going to school you can ramp up the lessons to focus on saving money for wanted items and spending money on needed items (although it is nice to get the wanted items sometimes). You can also introduce them to the idea of keeping their money and personal information safe. Finally, start rewarding them for chores done around the house to reinforce the idea that work generates income.
Once they enter high school you can introduce the idea of credit versus cash transactions, having a budget and the different types of bank accounts. Ramp up the pocket money and help them develop savings plans for that much desired big ticket item. Also talk to them about interest and saving for the future. Once they start working, help them learn about their payslips to ensure they are paid correctly. Also talk to them about tax and the role it plays in our society. Reinforce the idea of budgeting and how that helps them save for long term goals.
How to teach
The best way to teach kids about money is to be a role-model. Involve them in your budget planning, balancing the cheque book, saving and spending habits. Take little kids to the supermarket and show them how a shopping list helps control spending money. Make plans with your kids and encourage them to find ways to earn and then save the money to meet goals. It’s best to set short term goals so that kids can get learn how to be patient with their money. Once a short term goal is achieved, then go for something a little bit longer in duration. A saving habit started early in life is more than likely to help them to set themselves up for the future.
In order to be a good role model you will have to learn about handling money yourself. That way you can confidently and effectively answer any questions your child has about money. So don’t be afraid to visit some of the financial literacy websites before you start teaching your kid. Even if you (think) you know everything, it doesn’t hurt to ensure that your information is current and up-to-date. And if you don’t know everything, it will help you gain some tips on controlling the revolving door of a wallet.
The ASIC website also includes activities that you can do with your child. These include helping to construct shopping lists, whilst shopping compare the prices of different brands within a product category. Use a visual aid to help save and budget. My wife used to have labelled jars; the kids would then drop money into savings jar and get a picture of how they were going as they were saving. She did the same for ensuring that she had money to cover for utilities and the like. Eventually you can make the leap from the visual to the conceptual – so that when they see the balance in their bank account they automatically divide the amount between different financial wants and obligations. There are several other smart ideas on that site for you to explore.
Finally, the internet is packed with games and videos that teach kids about financial literacy. Here are a few sites to explore.
With this site, click on the age group (primary school, high school, etc) and then scroll down to find the individual digital activities.