19 Feb How to teach your children about money and develop financial literacy from a young age
With their sponge-like young minds, teaching your children how to understand, budget and save money from a young age will provide them with invaluable skills they will utilise for the rest of their lives. By setting the right examples and working with your children to develop smart money practices, they will be in a much better position when they start handling their own finances.
Now, we understand the thought of teaching your children how to be financially literate might seem like a mammoth task, but we promise it will be a simple and even fun activity for all involved! Here are a few examples and tips to get you started.
Consider giving your children pocket money.
Offering your children pocket money in exchange for household chores or activities is a fantastic way to teach them the value of work in exchange for money. This tactic not only shows them that they shouldn’t simply expect to receive money but also helps them to understand the accomplishment of earning something for their work. Here’s a few examples of household chores you could outsource to your children in exchange or pocket money:
- mowing the lawn
- vacuuming the house
- washing the car
- taking the rubbish out
- cooking dinner or making school lunches
- hanging out and bringing in the washing
- packing and unpacking the dishwasher
- walking the dog
Be sure you withhold or reduce their pocket money if the tasks are not done or not done properly. This helps to teach kids that they only get paid when work has been done to a certain standard and helps them instil pride in their work.
Make sure you explain how ‘invisible money’ works.
In this day and age, cash is exchanged a fraction of the time, which can give children the idea that money is both invisible and in endless supply. It’s crucial to ensure your children are aware of how these different systems work, where the money is coming from. When you tap your card using payWave, make sure you explain how the money is leaving your bank account, and even log in to show them. Taking them through your online accounts or banking Apps is a great idea so they can begin to understand how connected everything is.
Involve your children in everyday money decisions and budgeting.
Familiarising your children with everyday money decisions will enable them to feel comfortable and further their understanding as they grow older. Get them to help you shop around for any items online, finding the best option for your budget and needs. You could have them plan an event, such as a birthday party, and give them a set budget to work within for food, decorations and anything else. Another great option is having a family budget (the more visual, the better) which has how much money you have a week and how it is being spent. This will give them an idea of the cost of living and how difficult it can be to save money. Be sure to include weekly costs such as groceries, but also allocate funds for quarterly or annual expenses, such as electricity or car registration, amortised weekly.
If your children are receiving pocket money, you can even help them put together their own budget. This brings us to our next point.
Help your child to create and reach a savings goal.
Whether your child wants a new toy or game, a special pair of shoes or to have some money for the upcoming carnival; there is an opportunity to learn about saving money. Work with them to create a savings goal, with weekly or monthly increments and how they can reach their goal. This will show them how long it can take to save money, and is a great motivator for achieving their money goals.
TIP: We find a physical chart with smaller milestones is an excellent tool for this. Not only does it let the child see their savings grow, they get the satisfaction of crossing off each milestone they reach.
Giving your children the opportunity to become financially literate and responsible from a young age is vital today. With constant changes to how we use money and advances in financial technologies, being able to manage and protect your money is more important than ever.
If you would like to discuss the financial goals of you or your entire family, no matter the situation or complexity, talk to your team at Conrad Carlile. As experts in all areas of accounting, taxation and business advice, we pride ourselves on customer service and helping our clients meet their goals. Contact us today on (07) 3871 1522, or complete the online contact form and we will be in touch to discuss your requirements.