How to Teach Children to Manage Money.
The summer holidays are a great time to not only spend time with your children, but to also teach them some important money management life lessons!
Today, children are able to be more independent when it comes to making purchases. With new technologies, children can buy things easily, and as a parent, you may not even know about it (until maybe a month or so passes and your credit card bill arrives!). It can be tempting to pay for all your child’s expenses and buy them what they need. However, in some of these moments you can be missing out on valuable opportunities to teach them about money.
So, where do you start?
Here are some tips we’re sure you’ll find useful.
1. Teach the value of money
When children have a fixed amount for their pocket money, they must decide how and what to spend their money on. This is giving them the practice they’ll need as adults.
You can guide your kids by:
- Teaching them to look at the prices, so they learn about pricing of goods and services.
- Showing them that similar products can have large price differences.
- Explaining to them that quality doesn’t always correlate to the price of something.
Over time, you’ll hopefully see that they may begin to learn to check and compare prices before buying something. Afterall… it is their money that they are using! This can also help minimise the effect and importance they place of advertising they see.
2. Teach responsibility
Giving your children pocket money can help them learn financial management skills such as making their pocket money last for a desired amount of time.
Younger children may also need to take responsibility for keeping their money safe – like placing the cash in a piggy bank.
When you start giving your older children more money, you could also help them budget by making a list of expenses their pocket money must cover and calculating how much money they have left to spend on items they want.
3. Guide them on how to set and achieve goals
Giving your children pocket money teaches them about delayed gratification. If they want to buy something expensive like a bicycle, you could teach them to save some of their pocket money each week over a period of time so they can buy it. You can also add up how long it will take to save the required amount depending on the weekly amount they save.
At the same time, your children could learn to make trade-offs, like not buying smaller items so they can get a bicycle sooner.
4. Encourage entrepreneurial skills
If you link pocket money to optional chores, you can teach your children that certain actions are rewarded.
For example, if you’re paying for a garden service, you could offer money instead of paying someone else. Once you’ve changed your child’s thought process from expecting money to realising they must earn money, they might start thinking of ways to earn money from their hobbies.
5. Educate them about digital money
Making purchases online has become easier for everyone to do. Money is not only a tangible thing anymore, so it is easy for children to not fully grasp the concept that this is real money. For example, if a child is on your device like a phone or iPad, and your credit cards details, PayPal or other payment methods are connected to it, a child can easily make a purchase, not realising the full extent of the purchase. Not only ensure that you have security measures in place so no one else can make purchases, but also make sure that your children understand that this is real money taken from your bank account. This is a concept that needs to be discussed with them when they start to use digital devices.
Research shows that the best way for our young ones to learn is to let them give it a go. There are many helpful services and apps that can assist you with teaching children about money and here are a couple of our favorites…
Bankaroo
Bankaroo is the perfect option for children who love games. Created by an 11-year-old, Bankaroo is a virtual bank for kids to learn about money, saving toward goals, making decisions and tracking expenses all in one place. Using gamification and a colourful interface, Bankaroo engages young ones using fun badges. Check out the website here
Spriggy
Spriggy is Australia’s #1 Money App for Kids and Teens. It is a prepaid card and app designed to help teach kids 6-17 financial responsibility while giving parents peace of mind. Find more information here
Education and positive communication around money is key, so start conversations with your children today.
Source: https://bankaroo.com/
Source: https://spriggy.com.au/