I have 2 children aged 7 and 12 who have absolutely no idea of the value of money. I must admit that they are quite spoilt, so I only have myself to blame. Do you have any advice on teaching them the basics of money management?
It’s never too late to incorporate money lessons that will benefit your children for the rest of their lives. Here are some tips on how to introduce a level of financial responsibility to your little ones.
No, it doesn’t grow on trees!
Children need to understand that money is a finite resource, and that we all have a limited amount to buy the things we both need and want. Help them understand the difference between needs and wants. This is a key lesson that needs to be learned as young as possible. Explain why you pick one item over another. When you’re out shopping, point out the “must haves” and then items that you can do without. Ask your child what they want but explain why some may not be essential. It’s this decision-making process and knowing what questions to ask before they spend money that will lead to financial capability.
You need to make it to spend it!
Explain that in order to spend money, they need to make it first. Brainstorm different ways they can earn their own money and make it fun. Depending on their age, they will need to decide on the options which might work best. Some popular ideas could be basic chores like car washing, window cleaning, prepping for dinner etc. Parents would then pay them per chore or give them a set allowance per week on the completion of their full chore list.
Spend it thoughtfully!
Have your children plan properly plan what they would like to do with their potential earnings. Maybe they have their eyes set on a new toy, new trainers, or the latest Play station game. Help them determine how many household chores they will have to carry out or how many hours they would need to work to get their hands on the item. If they make a purchase, encourage them to keep the receipt. Each month, they can then look back on what they spent and evaluate what changes they need to make going forward. This will also help them to recognise the difference between a want and a need.
Save it!
Teach them about the importance of putting money aside for savings. Set up a jar they can drop money into and chart their progress as time goes by. Ensure the jar is clear so that they can see the money accumulate. To motivate them even further, offer to match their savings if they meet their targets. Once the jar is full, take them to a bank or credit union to open their own savings accounts where they can make regular deposits.
Give it away!
Discuss the importance of giving back and how they can help someone in need. Donating some of their savings to a charity of their choice or buying some flowers to hand-deliver to an elderly relative are just some of the ways they can choose to give back.
Read all about it!
Make learning about money management fun by picking up some good books like “The Money Ninja” by Mary Nihn or “Personal Finance for Kids” by Dazjon Tinae.
Learning the real value of a Euro and everything they can do to make it and spend it will encourage independence and set the stage for them to be successful financially as adults.
