Kids and money
As a child, I loved chips. At age five or six my dad gave me a choice – each Sunday if I had completed my chores the previous week, I could either have $1 as pocket money, or a bag of chips.
Now, this was the ‘80s, so chips were cheap. Seeking the instant gratification, I initially chose the chips. My dad urged me to reconsider, “but if you take the $1, you can save the change you get back from each packet of chips and buy more chips in the long run”.
Chips provided me with my first important lesson in personal finance.
Well, this was like a lightning bolt to the brain for me. By managing my own money, I could buy what I wanted and save what I wanted. This meant the more money I saved, the more chips I could eat!
Pocket money is an important tool in teaching children about money. In a cashless society, showing children what money looks like and getting them to use it will teach them from an early age that money has value.
Teach kids the value of paid work. Don’t give them pocket money for doing jobs like making their bed or tidying their room – they should do these anyway. Make pocket money contingent on undertaking tasks that you would otherwise do like sorting washing, vacuuming or gardening.
Save towards a goal
Encourage kids to save. You can do this by opening a bank account, or when they’re younger, use a piggy bank. The key is to get them to save for a goal like buying a new toy or game. Help them to figure out how long it will take them to fulfill their dream and make a big deal of when they achieve this goal.
A great idea is to create three separate “banks” using old jars that children can see their money growing in labelled “saving” “spending” and “giving”. Distribute 50 percent for saving, 40 percent for spending and 10 percent for giving. I particularly love the idea of a giving jar to teach children about social responsibility. Or, you can be technologically savvy and utilise a mobile app like Spriggy which helps parents and kids manage their money together.
Make it fun
My favourite game as a child was Monopoly. A raging capitalist in the making, I garnered great joy in buying up prestigious streets, sticking hotels on them and charging anyone unfortunate enough to land there huge amounts of money. There are plenty of games out there that you can use to teach kids about money including Ca$h Flow for kids, Net Worth and Pay Day.
Put them to work
As children turn into tweens and chores become a less enticing prospect of generating funds, turn your kids into budget monitors on your behalf. Encourage them to search for better deals on bills you regularly pay such as electricity, gas, phone, internet or even get them looking for bargains on items you buy at the supermarket. Offer them a financial reward for sourcing a better deal, or pay them a percentage of the savings across a year.
Finally, once they’re old enough, encourage your kids to get a part-time job. While jobs at home are good, the real world will provide them with valuable lessons about finance. After the first day of my paper run (during a hail storm!) I understood the correlation between hard work and money.