Liberty Newsletter May 2019 View the newsletter online

Money management skills for your young children

Share this article:
LinkedIn Email Facebook Twitter

How old were you when you first had an encounter with money? Do you know if you were fully equipped to deal with the added responsibility of the money in your hands? What about your children, do they know the value of the money that they're spending?

The reality is, teaching your children basic financial literacy so that they understand the value of money will benefit them and you. They'll understand the importance of the cash that they're spending and hopefully you won't need to spend so much money on your children in the long run.

It's also better to teach your children the lessons about money in your home. Otherwise, spending habits from friends at school may creep into your household. Your children must understand that money is earned and that it requires a careful decision-making processes.

Lay the foundation at three years old

By the time your children are three, they understand that you hand over money and receive something in return. They've seen you pay for shopping, buy presents or even put in petrol. They watch you pay for things every day.

Start teaching them slowly. Allow them to pay for bread, milk and other small items. Give them bigger bills to pay with so that the cashier hands them change. They'll soon grasp the concept that certain bank notes and coins have a larger value than others.

Top Tip: Make the learning process fun. Children learn quickly when they’re enjoying themselves, so don’t turn this into a difficult chore.

Up the level of responsibility from age four to five

When you children are four years old, teach them to count out coins for the things they want to buy. For example, if they enjoy eating sweets, like most children do, give them a few coins and ask them to tell you how many of their favourite sweets they can buy. Keep the rand amounts small. Teaching them that they can get ten sweets for R10 should be a good place to start.

Top Tip: Explain the concept to them, but then let them try to explain it themselves. Be patient and don't rush them. Allow them to find the answers to the money transactions themselves.

Motivate them between the ages of six and seven

As your children get older, their demands for the latest toys and gadgets become more expensive. Often they won't understand why they can't afford the most expensive toys and gadgets. This opens the door for you to teach them about making money before they spend it.

Top Tip: Encourage them to start a small business. Set up a basic business plan where they can buy a packet of sweets in bulk and sell the goods to friends and family. How many sweets would they have to sell to make up the costs and at what point will they be making a profit?

As your children get older, teach them about the banking system by opening a savings account. Help them set up a personal budget and most importantly, lead them by setting a strong example. Always remember to play to their strengths and interests and soon you'll have a money savvy youngster in your family.

Share this article:

LinkedIn Email Facebook Twitter

Your feedback is important to us – talk to us

Thank you for the feedback we have received on these newsletters so far. Your comments and suggestions will help us to give you relevant information for planning and managing your finances.

Please keep talking to us and telling us what you think! You can email your comments to [email protected].

Contact
Call us
Email
Email us
Facebook
Facebook
Twitter
Twitter

Liberty.co.za | Contact Us | Update my details

DISCLAIMER: This material does not constitute tax, legal, financial, regulatory, accounting, technical or other advice. The material does not contain any personal recommendations and, while every care has been taken in preparing this material, no member of Liberty gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. Liberty Group Ltd. is a registered Long-Term Insurer, and an Authorised Financial Services Provider (FAIS no 2409). Terms and Conditions apply.