It is important that our kids have a healthy attitude towards money from the time they are young to ensure that good money habits are instilled in them and carried through to adulthood so they can avoid financial troubles.
Talking to kids openly about finance will remove the taboo future generations have surrounding money. Already we are seeing younger generations coming of age and doing away with the notion that trying to keep up with the Jones’ is important, rather living within their means and being respectful of other people’s financial situations. As parents we can foster this attitude to make it the norm in decades ahead.
If you can afford it, one of the best ways to teach children the value of money is to give them a small sum of money each week in exchange for helping around the house. Creating a direct correlation between the chores they’ve completed and the money they’ve earnt helps them understand that money is a commodity that must be worked for and doesn’t grow on trees.
You can create this connection through something as simple as a chart hung on the fridge in plain sight for a regular reminder of all the help they’ve been given around the house and the benefits they receive for their hard work.
An opportunity to spend
Let them spend their pocket money. Forcing a child to save 100% of their pocket money will cause them to be disinterested in assisting with chores because they can’t see the reward. If you couldn’t use any of the money you worked all week for you wouldn’t be happy either!
For example, if you are doing the weekly grocery shop and your child asks for a lolly, you could suggest they pay for it with their own money. Realising that they cannot purchase all of the goods that they want and must prioritise their desires helps to reinforce the value of money.
Create a goal
Kids’ desires change pretty rapidly. Finding an item or experience that they want long enough to save for it can be challenging but once you do it can be a real motivator.
Teaching your child to set aside money to save for something more costly as opposed to spending all the money they receive each week is a great way to train future adults to save for a rainy day, switch to a long-term mindset and not get into debt.
Set up a bank account
Bank accounts for children often have much higher interest rates than those for adults. These interest rates help children see the reward in saving money as it adds up, removes the option to spend it easily on a whim and allows them to ‘play adult’ just like mummy and daddy.
If you go on a trip to the bank once a month to deposit their pocket money it creates a physical link to where their money has gone when they can no longer see it in their piggy bank and helps remove the fear some adults still feel walking into an unfamiliar and confusing place.
Teaching your child the value of money and how money works should be just as much of a considered lesson as learning to ride a bike. It will set them up to have a healthy outlook on finances for the rest of their lives .