Kids these days, eh? They don’t understand the value of money, right? Well, not unless we teach them. Learning about money, spending and saving from an early age can make a huge difference to your children’s lives, whether it’s understanding why they can’t have a certain toy or treat right now, or preparing them for a healthy financial future. So what can they grasp and at what stage?
Ages three to five
At this age, even a trip to the supermarket is exciting stuff, so use it to point out various prices and count out the money in front of them if you pay in cash. Little ones are fascinated by colours and shapes, so at home you can show them different notes and coins, draw your own versions, trace around the coins (keep them out of mouths) and play matching games. You could also make your own currency for them to spend and accept when they play in a pretend shop. Basic maths can also come into practice when working out how much to pay for something, and how much change should be given.
Ages six to nine
Children are able to complete simple chores in exchange for pocket money by this stage, so it’s the perfect time to communicate the importance of saving towards a ‘big’ purchase. They might want to spend half and save the rest, but if they want to blow it all then let them – and face any consequences. Let them decide. Making mistakes is all part of the process. Of course, you can also offer the option of them working harder around the house for extra money, or rewarding good behaviour with bonuses. As parents, make sure you’re consistent with your message, so the child can’t manipulate the ‘softer’ parent into buying them something that’s not budgeted, or wheedling more money out of them.
Ages nine to 12
Your child can now help you make decisions, perhaps choosing between two similar products at the supermarket and weighing up the pros and cons based on size, quality and price. You could also share the family budget with them, explaining income plus regular and one-off bills to help them understand that being an adult isn’t all fun and freedom! They are also old enough to understand that credit cards aren’t a source of constant cash, so explain repayments and direct debits. There is no money tree in the garden, sadly. This is also the age where requests for big ticket items such as phones and computers might be made. This is a decision for you to make as a family, but many parents choose to reduce a child’s allowance in order for them to contribute over a sustained period of time. This is also a good opportunity to explain the power of advertising to them!
Ages 12 to 18
Part-time jobs for teens are unfortunately difficult to find in this part of the world, but they can be doing unpaid work experience to get a taste of life in the real world. This might be the right time to trust your child with a monthly allowance, rather than handing over cash weekly – a larger sum will encourage them to think more carefully about budgeting over a longer period of time. They may want to save towards a car, and if you’re in a position to help, then matching what they manage to put aside can be very motivating. A regular family money meeting will keep everyone on track.
If higher education is part of the plan then you’ll need to explain the costs involved, and why it’s not a decision a family can make lightly. And if your bank allows, then get them a debit card and savings account so they can track spending and funds, as well as reiterating the potential pitfalls and benefits of credit cards.
Any advice to share that has worked for you and your family? We’d love to hear it. Let us know in the comment box below.