Teaching your child the value of saving and spending wisely can be a difficult thing. For many families, talking about money can be quite a challenging time, whether its with their children or even adults in the household. The adults make the money and the kids are the ones asking for it (in the form of pocket money or to buy gifts for friends). Financial experts tend to agree that understanding cash, credit, and purchasing of products is possible, and important, for building a sense of financial responsibility in children.
Important questions you should consider answering are yourself before you consider teaching your children about money: How do you best teach your kids about money? What kind of message should you teach them? How do you encourage them to save?
How do you best teach your kids about money?
You might be surprised at the ideas your kids have already picked up about money. Most of them develop just by watching you. If you’re always at an ATM, your kids might think an endless supply of money comes out of a machine in the wall. Or if you use EFTPOS, they could believe that a rectangular piece of plastic is all you need to flash at the supermarket to get the groceries.
These days, kids may hardly see notes and coins at all. For most of us, the days of bringing home a pay packet with a wad of notes inside is long gone. While you can still bank over-the-counter, many of us choose to manage our money electronically and online.
So, how do you explain the concept of money to your kids; that you have to earn money and then use it to pay for goods and services. Well there is actually lots of simple activities you can do and games you can play that will help your kids understand what money is, its value and how it works. This website (amongst many others) provided some great resources of games and activities you can do with your children to assist with learning about money: http://life.familyeducation.com
What kind of message should you teach them?
Learning good savings habits is an important life skill. The younger your kids learn about saving money, the better habits they will have for their life. It doesn’t take a lot of money to start showing your kids about the value of a dollar and how saving it is smart in the long-haul.
Teaching kids about the value of money is a little harder! You can use the different attributes of coins (colour, size, shape and weight) to help them learn that every coin is worth a different amount of money. Show them what money can buy. Make sure you use examples that they can understand. For example, one dollar will buy one banana. Ten dollars will buy ten bananas. (Okay – maybe bananas aren’t one dollar each, but you get the point!).
Teaching your child that spending less increases the amount they can save is as important as teaching them to put money aside. If your child regularly gets a treat from their favourite shop, challenge them to get something cheaper so they can save up more money for a bigger ticket item in the future is also a good exercise.
How do you encourage them to save?
Many parents struggle as their kids get older with thinking of different strategies to get them to tidy up, following instructions or doing their homework. Some parents resaurt to threatening of throwing away toys to not buying any more toys and games again. Unfortunately most of these methods don’t work very well as they end up eventually buying more toys again when being hassled at the shops or get given new ones from friends and relatives.
Kids for many generations have recieved an allowance or pocket money, some times this comes without strings, while for others it has to be earnt. Either method is valuable in helping teaching children about responsible money management. But an allowance is not the only way for a child to earn money. Having a garage sale and letting them sell old toys and games is also a great way to teach them the value of goods. Using the money they earn allows them to buy newer toy and games they may now want instead.
Kids love raiding their piggybank when they hear the ice cream man driving down the street. Many people keep visible jars or piggy banks for their children to put money to spend, money to save, and money to donate. If your child loves drawing, colouring and creating wonderful artwork, perhaps you could consider decorating their money jar with some of that wonderful artwork which would help inspire them to put their money inside. If you have some great photos of your child (or them with the family or their friends) perhaps including photos of that instead may work just as well. Kids would get even more excited about putting money into a piggy bank that features a design they love on it. Personalised money jars can be found for designing at most photo gift stores.
Consider opening a club savings account in your child’s name at a local bank. Some schools these days who have connects with a specific bank will share such information with the kids in class. Let them set a savings goal (an amount or a time frame) and watch the money grow (even at today’s low rates, it will grow). Explain to your child that its their account and it exists for them to save for really important things. Make sure your child receives a ledger, and share the bank statements with them when they arrive. Encourage your child to take birthday and holiday money and add it to the savings account. Kids feel more mature when they are doing grown-up things.
If your child is school age, put some of their money into a wallet. Let them know that if they spend it all, that is their choice, but there is no more that week once its spent. This will teach them the most valuable lesson – that if they spend it all on a canteen snack they will miss out on something else later in the week or the weekend. A wallet that is designed with their name, photo or artwork will help encourage them to keep their wallet closely guarded as well as their savings stored inside. Personalised kids wallets which can be found at most personalised gift stores.