One of the most important lessons we all have to learn in life is how to manage money properly – and the earlier, the better.
Be honest: when was the first time you truly realised the value of money? Some of us have our parents to thank for a great financial education – but for others, it takes a few personal stumbles to get the hang of it. And some of us are still learning!
Kids who learn who to save and spend sensibly are more likely to stay on top of things in later life, so it’s easy to see why teaching your kids the value of money is so important. With that in mind, Debt Advisory Centre have put together this guide to getting your children into the right money mindset.
Give them a ‘job’
One of the first important financial lessons is the old cliché that ‘money doesn’t grow on trees’. It’s essential that your kids understand that to get money, they have to earn it.
We’re not suggesting that you get your three-year-old doing the dishes! When they’re really young, you can start with simple tasks like getting them to clear up their toys or tidy their room for a small reward. As they get older, you can get them doing more ‘grown-up’ things like the laundry, washing the car or setting the table.
Teach them about budgeting and saving
Before they start spending the money they’ve earned, you should teach your kids the importance of saving some it for later. Explain how they could spend it all on something now, or save up for a few weeks for something even better.
The chances are that as they get older, they’ll want more and more expensive things (bikes, games consoles, etc.). This is where the real lessons can begin.
Discuss with them how long it would take them to save up for what they want. You can help them compare how long it would take if they saved all their pocket money for a few weeks, or just half of it, or however much they feel comfortable with. This way they’ll learn that the more they hold back, the bigger the reward in the long run.
Let them spend!
Getting your kids into the saving habit is a great lesson for later life, but don’t forget the main purpose for money: spending it! We all need a few luxuries from time to time, and if you focus too much on saving for later, they’re going to lose interest.
Like most things in life, the key is moderation. Remind your kids that if they buy something now, that’s less money for next week.
These three simple lessons will give your children a great head-start when it comes to living in the ‘real world’. They might complain now, but one day, they might just thank you for it.