Imagine you knew what you know now, when you were 18 years old. Would you have managed your money differently or made different decisions about what to buy? Chances are you’re nodding your head – we all wish we had more wisdom when we were younger.
When it comes to money, we have to make tough decisions and deal with stressful situations. By talking about it with our children and showing them the good and bad sides of money, we can set them up for success later in life.
Children are ready to learn about money from about three years of age. At this early age, kids can count, they understand the concept of owning something, and they can grasp abstract concepts, such as that one apple is worth two rand.
Here are some ways to teach your children some valuable financial lessons.
Let them earn some money
If your children receive pocket money, make them work for it. You can pay them a small sum for every chore they complete, and even give them a bonus at the end of the week if they did all their chores.
If your little ones are enterprising, help them develop a business idea that they can pursue over weekends or at school.
Open bank accounts for them
Now that they have some money coming in, it’s time to open bank accounts for them. Visit the bank with them and take them through the process of opening an account. This is a big moment in any child’s life, and you’ll see your children grasp the significance of the moment.
Show them how to keep track of how much money is in their account, and visit the ATM with them to draw some money. This is also a good time to talk to them about safety – keep a watchful eye on your surroundings to make sure no one is out to steal their hard-earned cash.
Help them save for a goal
Is there a special toy your little one desires, or does she have a hobby that she wants to pursue? Help them save for it. As the weeks go by, she will see her bank balance growing (or shrinking), and by spending less than she gets in, she will reach her goal.
Draw up a budget
A budget is a simple way to predict how much money we will get and how much we will spend. At the end, it shows you whether you have money left over, or whether you have run out of money. Your child will enjoy the challenge of trying to buy everything he wants with the money he has available.
It teaches some important concepts. Money is not infinite. Some things are worth waiting for. There is a difference between wanting something or needing it.
Talk about your own finances
The most difficult part about teaching your children about money is sharing your own financial journey with them. This means admitting mistakes and explaining the consequences of taking on too much debt or buying things on impulse.
As a parent, you have a great opportunity to take your kids along with you on your financial journey, even if it is sometimes difficult and stressful. Let’s raise a generation of money-savvy South Africans.