The next two articles are going to be about some great stuff you can do with your kids to teach them basic money concepts. There are many instances where some financial education at an early stage would have helped to avoid some of the costly financial mistakes people make as adults and enter the workforce. Here are some tips parents can use to start to teach some basic financial principles to their kids:
• Start early to help kids build a foundation to become a financially savvy adult. Lots of things we do every day can be used to role-play money situations and teach them good habits and choices about money.
• Let kids make choices. This helps build confidence and encourages them to think about the decisions they are making. Lay out the consequences of the choice they make. For instance, ‘If you don’t buy the chocolate bar now you could save that $2 and put it towards your new skate board.’
• Set a goal. Write it down and break it down dollar-by-dollar with an end target to show them how they will get to the end result of $80 for the skate board. You can use many day-to-day activities to get your child to think about consequences and choices and then help them understand the reasons why they made that choice – better outcome, progress toward their goal etc. Eventually, they will become thoughtful decision-makers.
• ‘Need or want’ is another useful concept to teach. Explain about things that we need to live, learn and grow, and then explain about things that we may want, the ‘nice to haves’. Explain that these are not as important as the things we need and that it’s okay to wait to get them or choose not to have them at all!
• Teaching value is another very important concept. You can do this by talking about their own preferences (like the stuffed toy they treasure and how they like it more than all their other toys). The value of things also determines what people are willing to pay so your child will begin to understand that people spend money on things that have a cost (show them price tags), as well as a value (their worth).
• Teach about earning money. By explaining about jobs and why people go to work, kids will understand quickly the concept of earning. Explain that people work to earn money for what they need and want, then get them thinking of what simple jobs they could do at home so they can earn money for what they need and want.
Next month, we will talk about saving, spending and sharing and look at some practical activities you can do with your kids to teach about money.