In an increasingly digital world, the value of money can be a difficult concept for children to grasp. Here are 5 tips for helping the financial success of your kids and grandkids so they become wealthy and wise.
When you were young, do you remember standing next to mum or dad at the corner shop and watching them count out notes and coins to pay for the bread and milk? This was a valuable lesson about the purpose and value of money.
Fast forward to today – few corner shops exist and the days of counting change are almost over. When our children see us pay for something at the shopping centre, it’s likely to be with a piece of plastic – or even by mobile phone.
That’s why it’s now more crucial than ever to consciously teach your children and grandchildren about money: how to spend it and how to save it. Here are five ways to do it.
1. Help them budget and save
Many children believe parents have an endless supply of money – which is why it’s so important to talk to kids about money from an early age. You can start by discussing your own household budget and explaining how you manage costs like weekly grocery shopping and phone bills. If there’s something your child wants, like a new soccer ball or item of clothing, work out a budget so they can save up and buy it. Then reward them by taking them shopping.
2. Give them pocket money
Pocket money is one of the simplest and most powerful ways to teach children the value of cash – which is why it should be earned rather than given freely. Whether it’s payment for completing chores or a reward for behaving well, children will understand very quickly that money has value. You can also separate their pocket money into portions for spending and saving, so they’ll learn how to put money aside for the future.
3. Set up a bank account
By setting up a bank account for your child, you can teach them the basics of everyday banking. It’s worth discussing the statements with them when they arrive – not only so you can explain what each part means, but also so you can check their progress towards their savings goals and praise them as they reach each milestone. You might even open a separate savings account to help making saving fun and easy.
4. Make money fun
Learning about money doesn’t have to be another chore: there are plenty of games you can use to teach kids financial literacy. From a young age, you can play-act spending situations with your kids, like pretending to ‘shop’ with their toys or using food items in the kitchen. As your children get older, these games can become more advanced. In fact, one of the best ways may be through playing Monopoly – which you can use to teach more complex concepts like rent and taxes.
5. Surf the net
The internet is a treasure trove of information on all things financial. Here are some popular sites:
MoneySmart – packed with online resources and activities for children of different ages
Kidspot– a popular online parenting magazine with games and ideas for finance education
Bankaroo – a fun virtual bank for kids to learn about saving, spending and budgeting.
Talk to us about financial success
To explore the financial strategies available to help your children or grandchildren, speak with the My Financial Design team today.
This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a Financial Adviser before making a financial decision. Information in this document is based on current regulatory requirements and laws, as at 10 December 2019, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by My Financial Design, its related entities, agents and employees for any loss arising from reliance on this document.