Why You Should Be Teaching Your Kids About Managing Money

November 27, 2015
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I always wonder why schools don’t teach our children about money given how important financial skills are in steering through life. As parents however, we can and should teach our children important lessons in finance.

Money was certainly a taboo subject in my family when I was growing up. I had no idea (and still don’t) of what my parents earned or how much things cost. In today’s society things are a lot more transparent. It is vital to be open about money with your children – educating and empowering children to become savers and investors will enable them to keep more of the money they earn and do more with the money they spend.

Here are some ways you can teach your young child about managing money appropriately:

1. Talk about money as soon as possible

As soon as your little one is able to count you should introduce them to money. The more they see it and talk about it, the more accustomed they will become.

2. Communicate

As your child grows up, continually speak to him or her about money – how to save it and make it grow and also how to spend it wisely

3. You may have to wait to buy something you want

Have your child set a goal, for example to buy a toy. This will make him or her realise the value of saving up and the reward at the end of it. Don’t let it be too pricey as that will take months to save up and the child will become frustrated by the process.

4. Open up a savings account

Take your child to your bank and open a savings account and begin the habit of saving at an early age.

5. Use trips to the grocery store as opportunities to teach children about the value of money

Trips to the grocery store are often your child’s first spending experience. Spending smarter at the grocery store by using coupons, shopping sales and comparing unit prices can save your family money large amounts of money.
To help young people understand this lesson, show them how to plan more economical meals, avoid wastage and to use leftovers efficiently.

6. Allow spending decisions

Good or poor – your child will learn from his spending decisions. Encourage your child to use common sense when making a purchase and initiate a debate about the pros and cons of making a buying decision. This would teach him the lesson that it would entail doing research before just buying something, especially major purchases.

7. Have family discussions around finances

Your child will be excited to talk about how much he has saved up and that he has earned interest on the savings. As your child gets older you can use these discussions as an opportunity to talk about other finance related topics such as how the economy works, how to use credit wisely and the advantages of investments. All of this information will be useful as they start to take ownership of their own financial wellbeing.

The way you choose to teach your kids about money is your own decision and should be adapted to meet your family’s needs. The important thing is to teach your kids that they are responsible for their own finances and by starting this process early it helps set the foundation for well-informed financial decisions in the future.

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