How we view money - in the form of our financial beliefs and behaviors - is largely influenced by what we learn from our parents and those around us while we’re a child. To help you raise money-savvy children, we’ve come up with five easy tips that you can introduce to your children while they’re young to help them understand what money is all about and ensure they develop a positive attitude towards it.
Knowing when to start talking to a child about money is less about the science and more about the child - each child is different and you will know best when it feels appropriate based on your child’s development and curiosity.
Look for opportunities to teach your children about money every day through simple and practical things. For example, letting them handle dollars and coins and receive change when grocery shopping can help them with the concept of exchanging money for goods and services. Or, while watching TV, you could ask questions about commercials you see and if your child thinks that product would be a good use of money or not, to get them thinking.
To help your children understand value and cost, set a budget together for a couple of days for certain things - maybe an agreed list of activities and snacks, and put your child in charge of the budget. If they want something not included in the agreed budget, they will learn that something must be taken out from the list as a result; helping them learn how to make choices and the consequences of spending decisions.
To introduce the concept of saving up for something they really want, why not ask your child to choose something they’d like to buy and create a piggy bank for them to put their allowance into. By watching the money build up towards their goal, they will learn how it takes patience and commitment to save for the things they want. If you don’t give your child allowance, you could use your own money and place it in the piggy bank together, it will still help them understand the concept of putting money aside and watching it grow over time.
Children learn from the example you set through your money beliefs and behaviors. For example, if you go into the shop to buy a set list of items and end up buying more than you’d planned, your child will notice. On the other hand, if you’ve managed to save for an item that you finally get to buy it, talking about the process with your children could help them understand the benefit of saving. Overall, setting clear intentions and sticking to them could inspire your children to pick up on your behaviors and replicate them in the future.
It’s important to have open and honest conversations when it comes to money, especially with children, who can often feel pressured to have the latest gadgets, toys or clothes to keep up with their friends. Children can sense when you’re stressed or worried, so if they’re being pushy about wanting something, don’t be afraid to have a conversation - it’s the perfect opportunity to talk about the cost of things and the importance of saving for the things they want.
Managing money as an adult is not always easy, that’s why we hope these fundamental principles help your children develop good financial habits from a young age and provide them with the basic tools to manage their money more effectively.