Teaching Kids about Money

Learning about money should be a fun and positive experience. It’s important to use positive language around money and ensure you remove any fear or negativity (example: Money doesn’t grow on trees; Money is the root of all evil).

Managing money is a necessary life skill. During our lifetime we will all earn money, spend money, invest and save money. And yet it’s a skill set that doesn’t come naturally to a large percentage of the population. Unlike English or Maths, it’s not a subject taught in schools (don’t get me started…) so it’s our job as parents, guardians and role models to teach our little ones the basic skills they will need to manage their money successfully.

An easy place to start is to discuss the difference between needs and wants and reward for effort (getting paid from employment). For small children (4-8 years old) involve them in the weekly shopping by giving them a small list of items to select. As they become familiar with the process then help them to compare brands and prices. When rewarding them give them coins to count and put in a piggy bank and talk about what they might be able to buy with their savings (remember to keep it small, simple and fun).

For children aged 9-12years have them work to a budget in different situations such as going out to lunch or shopping for gifts, even choosing their school holidays activities within a certain budget that is affordable to your family. Help them to understand that if they spend less than their budget, the surplus can go to their savings enabling them to have more for next time.

Many families pay an allowance on a weekly basis to their children. Linking an allowance to chores teaches children about the reward for effort system. However, for some this may be a little controversial. My personal belief is that children also need to learn to “contribute” to the household by helping with chores. If this rings true for you also then note that certain chores are not negotiable (ie clean your room, put clothes in the laundry) and others have a monetary value (vacuuming, hanging out the washing, unloading the dishwasher). Children will be hot and cold with chores but once they are over 12 years old don’t automatically pay them every week, wait until they ask for it and then remind them of tasks they need to complete before payment.

Ofcourse there is an app for everything and so technology can help our digi-kids to learn about money management. Consider apps like Piggybot for tracking and savings and iallowance for completing chores for reward. We also love Banqer for a fun way to learn money management in the classroom, get your teacher involved in this fantastic education initiative.

For teens, once they begin casual employment I recommend a 2 bucket approach – savings and spendings. If your child is a natural saver then be grateful. If your child is a spender you should encourage a 50/50 split to start. Discuss limiting online access to their savings as they will find a way to spend it. Ask their permission then allocate an amount each week that they give you to save for them. Tell them monthly how much they have saved as encouragement and consider incentives such as a top up from you if they reach certain savings goals. There is no right and wrong here, you know your children best and should trust your instincts.

Money habits are formed early in life. By giving them knowledge, skill and experience they will soon be ready for the next stage in life: investing!

While all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Tanya Carlson, GPS Wealth Ltd nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.