Stuck on where to start with teaching your kids about money? Here are 5 suggestions to get you on track. How many can you tick as a yes?
- Open a Bank Account for your Child (preferably as soon as they are born). From five years old, show children see their bank statements or bank book entries and teach them to save at least 50% of cash gifts and pocket money.
- Save Save Save. Saving means more than just getting cash in the bank, it means children learn the important life skill of gratification. The big G. If your child loves to spend, refrain from taking them shopping and if you can afford a splurge, they don’t have to know about it. Saving teaches children about goals and financial wisdom and ultimately delayed gratification.
- Act as a Money Smart Parent. Don’t use a credit card and explain to your children if you don’t have the money to buy something, you can’t afford it. Children pick up habits – be good with your own money and your children will follow suit. If you give a % of your income to charities, chances are your children will choose to do this when they start earning money as well. There are many examples about being a money smart parent. Take ten minutes to research this. There is so much information available online.
- Demonstrate Opportunity Cost on a Regular Basis. Teach your children from five years old the many opportunities any amount of money can buy. “If you buy that pair of earrings, you will not have money to go to the movies later” “if you take bottled water to the movies, you will have $2 to buy an ice cream instead” “if you take your lunch to school, it will save $20 a week for your holiday spending fund” “if you save $5 every week from your pocket money, that will be $260 plus interest in the bank after one year”
- If it Is Not Working, Try Something New. Finding out what systems work well takes trial and error. If a tick system on the fridge does not work for earning pocket money, don’t despair, it’s not for everyone. There is no point screaming at your children every day for two weeks if they do not follow a pocket money system you have carefully created. Nor does it make anyone happy if you freak out when the kids refuse to wash the dishes. What about folding the washing or cleaning windows? If it is not working, try something new. It will all give everyone a few less grey hairs. The trick is, don’t give up! It’s not easy, nor is teaching kids to eat most vegetables.
And as a bonus essential, practice CONSTANT GRATIFICATION. This means giving simple and fun rewards to keep your children engaged. This could be as simple as a Friday movie night at home if they children do requested chores or paying them an extra $2 in pocket money for jobs well done. If your children understand they will be rewarded for good behavior, they will keep up the good work.
Good luck and don’t be too serious. Money should bring laughter not tears.