Teaching kids about money, when should you do it and why is it a good idea?
Teaching kids about money management is an important part of their future relationship with money and can help change whether they grow to be good savers or spenders.
Teaching kids about money can show them how setting goals and understanding the value of money can have a positive influence on their lives.
There is no right time when it comes to teaching kids about money, however primary school is often a good time to start as they can learn the value of money through chores etc.
Teaching kids about money and responsible saving.
Firstly you should start by explaining the concept of earning and saving money to your child through chores and pocket money.
You also need to teach them the importance of saving and responsible spending so as they grow to be savvy money managers.
Give your child goals to motivate them to save, they may want to buy something special and you can encourage them to put that money away each week for however many weeks it will take them.
Another good tool for teaching kids about money is to use visual aides such as charts to show how their money is increasing each week.
Also allowing them to see the balance in the bank account can be a powerful tool as they are able to visualize and see the money rather than just imagine.
Some banks have apps for teaching kids about money , check out the Commonwealth Bank App as an example and compare it to others and see which one works for your children.
Another great tool n teaching kids about money is having “family or monopoly money”.
You can pay your children with “family money” and they can pay for things around the house with their money and at the end of the week they can cash it in for real money or put it in the bank on banking day.
Children can even have a wallet with their money in it and you can set up a shop front in the house for them to buy things.
This game would obviously apply to younger children; older children in high school for example should be learning to be responsible for real money in and out of the home.
What are the bank requirements for children?
Most banks will require that children under 13 years of age have a parent set up their account and have joint ownership of that account.
However once children reach over 14 they can open their own bank accounts.
Teaching children about credit and debit cards
How money works can be very confusing for kids especially when they see us using credit and debit cards and don’t actually see the money changing hands.
Talk to your kids about how you go to work for money and that money is put into your bank account or debit account.
Explain how you then use that money to pay for things like grocery’s and bills with your card.
Teaching your kids about money coming in and out of your bank account can be a very useful tool for their future.
Taking them to the supermarket and having them see how much items cost and allow them to buy some items and compare prices can open their minds to how money works.
Take your kids with you to the ATM, there they can see the physical money being withdrawn and deposited and how much is remaining.
Paying bills can be another way to teach your kids about money. Whether you pay yours bills online, via the phone or at the post office this presents a great learning opportunity for your children to see how bills are paid and processed so take them along with you!
Budgeting and explaining how to budget with your kids can be another great tool for them to understand money.
It may help them understand why we so often say “No that is too expensive” and may even give you a reprieve from the pester power that so often happens in the supermarket.
Teaching kids about money and how much money you have each week and why it is important to stick to the budget is very instrumental in their financial education.
In conclusion the key to financially savvy adults is teaching kids about money and the skills of money management and budgeting.
These will be lifelong skills for them and will help them to reach financial stability in the future!