A Financial Education: Child’s Play
“Teaching kids about money is never just about money” – Dave Ramsey
As with most things in life, a good lesson is one learnt early. It makes you develop the skills needed for future challenges. And money is no different. If your kids develop good financial skills from an early age they will be better equipped to deal with the financial challenges of adulthood. As a parent you will be the one responsible from introducing your children to the concepts of money and saving.
As such, here at MW Lomax we have put together this handy little guide to use when teaching your young one lessons in finance.
- No Free Lunch
There is no such thing as free money – and this lesson should be taught to your children. Therefore, it is advisable not to give your children pocket money merely for the sake of it – a first and early step in financial independence. Whilst this doesn’t mean having your 3 year old mow the lawn for $1.50 an hour, you should emphasise the point that money is paid for a job well done. Whether this be good behaviour, a good school report or household chores, the underlying premise remains the same.
- Piggy Knows Best
Encouraging strong saving habits can be a challenge for people of all ages. With children, the mundane task can acquire an element of fun and novelty merely by the use of a piggy bank. Piggy banks with lights and sounds every time a coin is dropped in are even available these days. Anything that will make saving fun is ultimately going to benefit you and your child. Furthermore, the physical nature of counting the money in a piggy bank can give children a greater sense of accomplishment.
- Cold hard cash
In the modern financial world of credit cards and online banking, it is uncommon for children to see people buying products with physical money. This concept of ‘invisible’ money can make it hard for children to understand the finite nature and true value of money. Purchasing things with cash in front of your child can help them best understand the trade-offs associated with purchasing items.
- Shop around
Teaching your child the importance of seeking value in their purchase decisions will work to create a fundamental behaviour that will hopefully influence all financial decisions. Compare products and prices with your child on any item they or you want, and question whether the more expensive product is worth the higher cost.
- The Bank of Mum & Dad
The bank rewards you for saving with a little thing we all know as interest. As your children at a young age will ultimately look to you for rewards – not a financial institution – good financial behaviour and saving habits should be rewarded. Whether this be matching dollar for dollar savings, or something as small as an ice-cream when they reach a savings goal is entirely your choice, just try and keep things realistic. After all, good behaviour inclusive of financial behaviour should be positively reinforced.
Utilise these handy little tips and your child will be one step ahead when it comes to financial education. Years down the track, your children will reap the rewards and who knows, they might have a little change left over to shout you a nice dinner for your help!