How can you give your kids money smarts?
Children learn a lot from their parents when it comes to money—arm yours for financial success.
When it comes to money, your own behaviour and attitudes can strongly influence your kids. Help your kids to be money smart by demonstrating positive money habits and teaching them valuable lessons as they grow older.
Teaching money smarts
Money management has always been important for children to learn about, especially as they grow into young adults and face the big wide world out there! It’s even more the case today, in an ever-growing digital world—kids are trained to become consumers from a young age.
What’s more, it can be hard for kids to understand what they can’t see. And shopping online—where there’s no exchange of physical cash—makes it easy for kids to miss learning about the real value of money.
The good news is the desire to buy things does provide an opportunity to encourage healthy financial habits though, like saving, budgeting and working to earn their money. The best principles to teach kids just vary at different ages.
Here are some tips for building money smarts no matter what age your kids are.
Making money tangible for young children can be helpful. Your child may benefit from seeing money visibly accumulate in a jar. You can convey the way money works by playing games that show your child how many coins are needed to buy particular items—and how spending reduces the quantity of money in the jar.
Primary school kids
When children reach school age, introduce more practical examples by connecting household jobs they do with money as the reward. It can be a good time to set up a savings account for your child1 and to learn basic goal setting and budgeting.
As your child gets older, a weekend or holiday job can help them appreciate that working leads to earning money. It’s also a good stage to help your child start setting goals, say to buy a new mobile phone, while meeting short-term expenses like buying snacks, clothes and going out.
Once children are earning money on a regular basis, if they’re still living at home, then it’s time to discuss living expenses, including board and chipping in for food and utilities. It’s also an idea to develop their interest in building wealth for the future. Be sure also to cultivate an understanding and interest in their superannuation and how starting early can make a big difference.
Money lessons need to be adapted for digital spending. To do this it’s a good idea to involve kids in the digital purchasing process when you’re doing it yourself. Walk them through how it works and tell them the actual price so you can take this out of their pocket money, for example. It’s also a good idea to take them to the ATM with you and explain that the money coming from the machine is reducing the amount the family has in savings.
It’s never too late (or too early)…
Investing from an early age can help build substantial wealth over time. So share our budget planner and speak with your kids about planning for financial success. Integrating money into your children’s lives can be a positive experience—along the way they’ll benefit from your knowledge and may even want to celebrate their achievements.
- A parent/guardian can open an account in a child’s name who is under 13 years of age, as long as they are a signatory. If the child is over 13 years of age, the parent/guardian must still open the account, but the child can be a signatory as long as the standard account opening requirements are met. Visa Debit, PayTag & AMPwave technology is only available to customers over 18.
By AMP, originally published on 2/4/15 amp.com.au/insights