Who said financial skills are just for grown-ups? Teaching kids about money provides them with a toolbox that will be incredibly useful through life in making confident and informed decisions in the future.
The importance of teaching kids about money goes well beyond money itself. It can be the foundation upon which key skill sets are built, such as ethics, empathy, organisation, time and risk management. Of course, the style and approach is personal to every parent, but if you’re not sure where to start, check out these handy tips.
1. Money is not unlimited!
Banks and ATMs can be fascinating to children, let alone debit or credit cards; but they often view them as free-money dispensers. Helping kids realise money is a finite resource earned through hard work, and banks are just a place to keep it safe, is a good starting point. How? Perhaps offer rewards, like pocket money in exchange for doing small household chores.
2. Getting into the saving habit
Pocket money is a good way to give kids a financial head start. Kids as young as five can be taught how to manage their petty cash. But keep in mind that the path to ‘money wisdom’ is paved with mistakes. If you allow your kids to make them, they will learn first-hand the consequences of overspending, and the importance of working within their budget. You might be surprised at how fast they might create their first ‘savings plan’.
3. Waiting pays off
At all life’s stages, it can be easy to get caught up in the ‘buy now, pay later’ mentality, which can translate into mounting debts. Reinforce the concept that waiting pays off by giving your children everyday examples. Practicing ‘delayed gratification’ is a valuable skill, which can positively affect every aspect of life.
4. Avoid negative associations with money
As much as you can, try not to pass along a negative money mindset to kids. Use the financial challenges you may have gone through as useful lessons, and help your children see money as an opportunity, rather than a risk.
5. Lead by example
As we all know, kids are blank canvases, eager to absorb knowledge and understand how things work. As adults, we’re responsible for planting good seeds and leading by example. If you’re teaching your children about the importance of waiting, for example, try to avoid impulse buys. The bottom line is, you can use these moments to get a more complete picture of your money habits, and teach yourself a lesson or two.
After all, that’s the beauty of financial planning: there’s always room for improvement. And of course, encouraging saving and smart spending habits is an important step towards building a money-savvy future. You can start with making saving fun, and introduce more sophisticated saving strategies as your children grow.
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We’ll look at you and your family’s entire financial picture – where you are now and where you want to be, and help you shape a plan that will set your family up for the long term. You’ll be amazed just how transformational the process can be!
To get started, have a chat with our Financial Planner Hayley O’Brien.