Many youngsters are introduced to a second language at primary and even pre-school.
It’s an approach we should also take to teaching children the fundamentals of good money management and sound financial habits, because it’s in the early years that the fundamentals can be established most effectively – just like learning a new language.
It’s something that I’ve tried to do with my own children.
Perhaps the everyday role modeling we do as parents has the most powerful impact.
Everyone’s spending habits are different, so think about how your habits could rub off on your children. You might spend all of your available money on expensive pieces of clothing or accessories, a new car or an overseas trip. You might buy something on sale for half price and save the rest. Or you might be someone who saves or invests most of the money you earn.
How you choose to spend your money will have a big influence on what your children do with theirs, too.
Demonstrate the ways you can manage your money. Have a budget and let your children see that you actively use it to stay in control of your money.
Always try to be a sensible shopper. Trips to the supermarket can be a great way to discuss the spending choices you make and whether the budget allows for extras or treats.
Demonstrate how you save money. Think about getting a piggy bank for loose change and let your children see it grow. When it’s full they can help you count the savings and discuss what you will do with it.
Always watch what you say. Children’s ears are always open, so keep sensitive discussions about money away from them. Don’t argue about money in front of your children. This can not only create stress for them, but they may develop negative behaviours themselves in managing financial issues.
When it comes to being more hands-on, there’s no better way to teach kids about money than pocket money. Agree a schedule of tasks for a rate of ‘pay’. Importantly, let them have control of their pocket money – or at least some of it.
Let them decide what to spend their money on each week. Some might spend all of it at once on small items like games, toys or at the school tuck shop. Others might prefer to save for a bigger purchase later on.
An important lesson they will learn about spending is that once the money has been spent, you can’t get it back.
If their pockets are empty and they are asking for more money or complaining they don’t have any left over, you need to be clear that they’re in that position because of the spending decisions they’ve made. Let them know they’ll have to wait till their next pocket money ‘pay day’.
A good habit can be to get them to a write a list of the things they’ve spent their money on and how much each item cost. This will introduce them to the idea of budgets and managing their money. They’ll soon see how quickly it can add up and where the money has gone.
For older children, it’s a good idea to open a bank account. Then they can start learning how to deposit and withdraw money. It can also teach them how to earn interest and might kick-start discussions about investing. Help them set goals for their money. Saving for a car, travel or to help with university costs can be realistic goals for teenagers with after school or weekend jobs.
Educating our kids about money is important and some of the best lessons can begin at home.