Let’s be honest, as parents we often tend to follow the “do what I say, not what I do” approach when teaching our kids about life. If you want your children to learn about money, though, the best way is to start by showing them how you manage yours.
An inclusive budget
Having a household budget and a financial plan, with the family involved, is a great way to teach children how to manage finances. As a family you can set some healthy money rules, such as:
- Save at least 10% of your income (pocket money).
- Never buy on credit.
- Understand the difference between needs and wants (as parents, we’ve all heard that plaintive cry: “…but I need it…””).
Pocket money
The sooner children start handling money, the sooner they can start learning to manage it. Tie their pocket money into chores around the house so that they learn that money has a value, and that you work for the money you earn.
For older children rather than buying them their toiletries, air time and clothes, give them the money you would spend on these items each month and make them budget and allocate it. The first month they may blow it all on airtime, but within a few months they’ll have learnt how to find a balance. Never give your children money “in advance” – that will only teach them to live in debt!
Encourage savings
Encourage your child to put money away for savings, especially when they receive birthday money or money from a holiday job.
Let them create a goal that they can save towards – for younger children it may be an expensive toy. Older kids may want to start saving towards a car. A goal gives them motivation to save.
Start a business
Children are by nature very entrepreneurial – they don’t have the fears that their parents may have.
If your child has an idea on how to make money – selling cookies to their friends every Friday, perhaps - help them write up a business plan so they may better understand the costs versus the income.
Be charitable
Children are also community-focused and tend to want to help those less fortunate. Chat to your child about a charity they may like to assist – either financially or through their own time.