As a parent the things that you worry about are infinite, literally. Now that my daughter is starting to get a little older one of the many things I have started ‘thinking’ about (aka worrying about) is teaching her about money.
Arguably the difference between being good with money and being awful with money will have one of the biggest impacts on your child’s adult life. At the extreme ends it can be the difference between being them moving easily and comfortably through life and them struggling on daily basis for basic essentials such as food and shelter.
But what should we teach them and when and how? As with most things, there are any number of schools of thought available on the internet about what we should teach our kids. At the end of the day it depends a lot of your personal beliefs and situation however there are a number of key themes / ideas that run across most of these:
1. Start Early
The sooner you start teaching your child about money the better (that goes for anything really doesn’t it?). Depending on their age kids will have different levels of comprehension ability. There are some good suggestions here and here for age appropriate activities for kids.
2. Spending and Saving (or Spending, Saving and Giving)
When giving your child pocket money/an allowance teaching them to save some and spend some (and give some if that fits with your personal beliefs) is important. This CEO takes it even further and charges a ‘family tax’ on his kids pocket money.
Here are some cool ideas about how to teach your kids to save money.
3. Want vs Need
The ability to understand the difference between a want and a need is crucial. So often these days our wants are treated as needs. I’m sure each generation says it about the one after them but it seems that so many kids these days have no concept of a want vs a need. It was even discussed on Seven Sharp recently where they highlighted an extreme example of a family in Chicago who chose to not buy anything new for a whole year. While you don’t need to go to these extremes its good for kids to know that TV, Peppa Pig cookies, Loom bands and brand-name clothing are all wants, not needs.
4. Lead by Example
Last but by no means least, leading by example. It goes without saying really, our children copy our example in almost all things and money is no exception. Be open and honest with kids about family finances. Take them shopping with you and involve them in age appropriate family financial decisions.