Set your child up for future financial security with these fun ways to learn about money management.
We all want our children to grow up understanding the value of a dollar. The money lessons you teach your kids when they’re young will help them pay bills, avoid debt and generally manage their money intelligently when they are older.
But how can you teach your pre-teens about money in a world where more and more transactions take place digitally, with no physical money changing hands? Just as importantly, how can you keep these lessons fun at the same time? Check out our top tips on how to teach kids how to manage their money.
Search and compare kids savings accounts
Hit the shops
The supermarket is a great place to start teaching children about money. Before you go, sit down and work out a shopping list with all the items you need for the week ahead, and calculate how much you’re willing to spend.
Take your children shopping with you and let them help you find each item on the list. They’ll soon learn the importance of shopping around for the best value, and also just how much money it takes to buy the essentials they may take for granted each and every week.
Pay the bills
Whenever your phone, Internet or utility bill arrives, use it to teach your kids that these services they use every day cost money. As an example, explain how long you had to work to earn enough money to pay the $300 power bill. Not only will this help them understand the importance of earning money, it also helps awareness of how everyday actions, such as exceeding your Internet data limit or leaving the lights on all day, cost money.
Work out a budget
You can take this a step further by working out a weekly budget and sharing it with your children. Include everything from groceries and petrol to electricity, phone and Internet, and entertainment.
Discuss the amount you have to spend each week and explain how that figure relates to the amount you earn. Helping kids understand the bigger picture of the family budget and learning that very few things in life are free, will stand them in good stead for the future.
You can even teach them to work out a budget for things they want to buy, such as lollies, sporting equipment or new toys.
Set a goal
One great way to encourage children to pinch their pennies is to save towards a goal. This could be an individual goal, such as a new toy, or a goal for the whole family that your child can contribute to, such as a new TV or a weekend away.
Establish how much your child will need to save to achieve the goal and encourage them to make contributions whenever they can. Whether it’s putting spare change in a piggy bank or making regular deposits into a kids’ savings account, it will teach them how saving a small amount each week can quickly add up.
Make them earn their pocket money
It’s hard for kids to understand the value of money if they don’t do anything to earn the money they are given. If you give your children pocket money, make sure they only receive it if they actually complete tasks, such as a list of chores they can do around the house. Simply giving them a weekly allowance no matter how much they’ve done will do nothing to teach them about the importance of earning money.
Give them actual money
With the rise of online and mobile banking, and credit and debit cards, paying with cash is becoming less and less common. As Australia heads further to becoming a cashless society, it is increasingly difficult for parents to teach children the value of something they rarely, if ever, see.
With this in mind, take some time to show your kids different denominations of coins and notes. Teach them how they are worth different amounts, and use this currency for some of your everyday purchases so they start to understand how far a dollar goes.
Open an account
One of the best ways to teach kids about money is to open a bank account for them. When the money in an account belongs to them, children will naturally take more of an interest in how those funds are managed. A savings account that pays interest on the balance, or even one that encourages regular deposits, will also help teach smart money habits.
If you teach your kids the right financial skills early on in life, they’ll be well equipped to manage a budget, pay off their credit cards and save towards any goal they wish.