One of the most valuable skills you can pass on to your children is good money management. Showing kids the basic steps, such as how to budget and shop around for the best price, will establish good money habits for life.
Piggy bank basics
One of the most valuable skills you can pass on to your children is good money management. Showing kids the basic steps, such as how to budget and shop around for the best price, will establish good money habits for life.
Here are some tips on teaching your kids to be savvy about how they earn, spend and save their money.
Start early
It’s never too early to start teaching your kids about money. Children can learn how to save coins in a piggy bank before they understand how to count the right change.
Even very young children, including pre-schoolers, can learn the value of money and saving for small goals. Try showing them how much $2 or $5 can buy in the supermarket. Talk to them about the difference between the things they need and the things they want.
These fundamental financial and life skills will serve them through to adulthood.
Encourage saving
Find out what your children want to buy. Then help them think about ways they could earn pocket money and save for the item: toys and games if they are young; or books, movies or a special event if they are older.
Discuss how much they will need to set aside from their pocket money or their pay each week to reach their target. Encourage your children to stay on track by offering to add to their savings if they achieve a particular savings goal. Get started by using our calculator.
Pay pocket money for doing jobs around the house
Pocket money is a great way to teach children that money has to be earned – it doesn’t magically appear from ATMs. Set age-appropriate tasks for your children like helping with the gardening, washing up or putting the bins out. Pay them a small amount like $1 for each job they do. Draw up a job chart to let your kids tick off their tasks.
Show children how to budget
Learning to budget is an important skill. Teach your kids how to budget by:
- Giving them a combination of notes and coins in their pocket money.
- This teaches them how to handle different sums of money, and they can immediately put a few coins or notes aside for saving.
- Showing them how to read household bills and bank statements.
- Sending your older kids to the grocery shop with a shopping list and a fixed sum of money. Tell them that they need to buy everything on the list, and can save any money left over. They will need to consider branded products, bulk buying and even where to shop.
- Letting them pay for small expenses and asking them to check they get the right change at the checkout.
- Giving them a fixed amount of spending money for family holidays. Show them how much they can afford to spend each day to avoid running out of money before the holiday ends.
Help older kids get a part-time job
Teenagers can benefit from having a casual job. It provides valuable experience in finding and applying for a job, and teaches them the responsibilities involved with employment. Having a job also gives your child an independent source of income.
Get your child to draw up a spending budget for their wages, allocating part of the money to spending and part of it to saving. Running out of money before pay day is a great lesson in the value of sticking to a budget.
Encourage them to set specific and realistic long-term goals and to save some of their pay each week towards their goals.
Teaching your kids how to manage money from an early age provides valuable skills for budgeting and saving, and establishes sensible money habits that will stay with them for life.
Source: moneysmart.gov.au
