Research shows that it’s never too early for children to start learning about money management. Fostering financial understanding early will lead to confident and independent decision makers and is more likely to result in financial stability in adulthood.
We recently introduced Part 1 of ‘Kids and Finances’ which highlighted how our own financial habits can impact our children. As such key influencers, parent behaviour is very significant. In addition to improving those weaknesses that may be rubbing off on them, there are simple everyday measures we can take to support the financial literacy of our children.
So, besides upping their daily vegetable intake, reducing screen time, limiting junk food, raising resilient and kind children and a million other areas for improvement, you can add ‘make money matter’ to the list when it comes to gold star parenting!
1. Have your child create a budget – find an engaging platform online or select the right App to make it more interesting. Budgeting, boring as it may be, builds a good awareness of money from the outset and helps children understand that money can be divided up for spending, saving, investing and gifting (i.e. children may develop an early interest in supporting different charities). Children learning to take control of their money is vitally important, as is achieving a level of confidence in money matters.
2. Set some goals with your children. Put your heads together to come up with something they’d love for their next birthday – consider something that requires saving for over an extended period (bike, iPad etc) and map out a plan to help them get there (see point below).
3. Consider deal-making – to encourage your kids to save, consider matching their savings with a top up/bonus from time to time in recognition of their efforts to date.
4. ‘Need’ versus ‘Want’ – help your tribe understand the difference between necessities and luxuries. Consider showing them items relevant to each parent. For example, Mum might present the receipt from the weekly grocery bill next to that of those fantastic leather boots she just purchased. With both valued at over $200, they fall into different categories even if Mum insists that the boots were ‘needed’!
5. Building an enquiring mind is important. So talk openly and often with your children as you deal with everyday finances; at the supermarket as you swipe your debit card (they need to understand that virtual money is the same as physical money and both can run out) at the ATM as you withdraw cash, whilst paying a bill, as you work on the family budget or when compiling the weekly grocery list.
6. Try the Pocket Money Challenge for a few months. Given the option of weekly payments or a lump sum, kids may initially prefer more cash in hand at once. Learning how to manage that money across a month is a good lesson. And in the event the lump sum doesn’t last, will they decide those smaller, incremental payments are more manageable?
7. Encourage them to be comparative shoppers. When your child has something in mind to buy, sit down with him/her and look online together. If the item they’re after is a better value from an overseas seller, the sense of delayed gratification will have an impact too.
8. Open a Bank Account. Find a bank that makes it fun. There are great options out there tailored to kids. Little freebies like a moneybox or drink bottle can create such a sense of excitement when you’re young. Being excited about your bank is unlikely to last so encourage away…!
9. Let them make mistakes with their money. For example, should your child decide to spend all their savings on a passing fad (Pokémon anyone?) that’s soon forgotten, they may not be so hasty to jump on the spending bandwagon with everyone else next time.
10. Teach them about scams. Show them those emails or offers designed to draw them in (!!!!CLICK HERE TO WIN THOUSANDS!!!). It’s helpful to learn early that something too good to be true often is.
11. Encourage them to speak up. This goes back to feeling confident, but kids/teens need to be comfortable in asking questions. I.e. in a supermarket or retail store when the advertised price is not what scans at the checkout.
For most adults, money matters aren’t particularly fun and are closely associated with bills, debt, mortgages and serious responsibility but before your children have to worry about all of that, consider introducing simple measures likely to lead to financial stability in adulthood. And there’s even the possibility that your efforts at home may be matched at school…
Australian schools have recently introduced a terrific educational program to build the financial literacy of primary school students. A concept created by a 24-year-old New Zealander and a few friends has been a big hit, with head office recently relocating to Sydney and global expansion underway.
Banqer is a free program that teaches kids handy money skills. Children aged six to 12 can create their own (fake) bank account for everyday transactions such as tracking their spending, setting up payments or transferring money. Teachers can even create a classroom economy with Banqer dollars rewarded reflective of student behaviour. School students can use their Banqer dollars to invest their money and even trade jobs. And to keep it really interesting, teachers can even influence the classroom economy by creating unexpected interest hikes or triggering natural disasters that impact stability.
This program is another wonderful way for children to learn about taking control of their own money. Things sure have come a long way since those Dollarmites accounts from the Commonwealth bank!
For further information on children and finances, take a few minutes to watch this video developed in partnership with the Koch family and Father Chris Riley’s Youth Off The Streets; Teaching kids about money.
And if Banqer sounds like something you’d love to see at your child’s school, here’s more.
Our guest writer, Yvette Harper, has many years of experience in the media having worked at Channel 9, Prime7 and in print media. Yvette’s writing background is diverse with articles published in magazines such as the Australian Women’s Weekly, Practical Parenting, Coast Living and Focus Magazine. With her freelance feature pieces, Yvette’s profiled celebrities and written in-depth articles on breast cancers survivors and organ donation. She has also written magazines for Coffs Coast Tourism. More recently, Yvette has focussed on copyrighting for business clients to improve their relevant marketing material such as website content, social media, newsletters, internal articles, advertorials and award submissions.
Yvette’s been blessed to have some fascinating life experiences too such as managing a wildlife photographic camp in Botswana and living in Southern Lao where weekly grocery trips meant getting the passport out and going to Thailand with her young children. Yvette and her family are now Coffs Harbour based.
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