The 1, 2, 3 of money matters for kids

By admin
12 June 2014

Money is a part of our everyday lives and being financially literate helps us make informed and sound decisions about our money. The earlier we teach our kids these skills, the better. Here’s some great age-appropriate advice for kids.

Eunice Sibiya, head of FNB Consumer Education, says parents are sometimes hesitant to talk to their kids about money because they feel they’re not financial experts, their children are still too young to understand financial concepts or their children might make the same money mistakes they have.  “However, there are different basic concepts and practices that you can teach your kids at different ages that will equip them with the knowledge to make sound financial decisions in the future,” she says.

Ages three to five

Children in this age group are too young to understand concepts such as finance, saving, budgeting and so forth, but there are opportunities to introduce basic financial concepts to little ones. “Many of us have been out shopping, in a queue and waiting to pay and there’s a child wanting sweets or toys. This is a good time to introduce some basic money concepts,” Sibiya says.

Children at this age can understand you need money to buy things such as ice cream or clothes. So if you don’t have money, you can’t buy things. Another good tip is to explain to your little one that the only way to earn money is to work, and encourage them to think of ways to earn money, such as helping with chores.

Sibiya says, “Explain the difference between ‘wants’ and ‘needs’.  While you’re shopping, point out needs such as soap, food or toilet paper, and describe ‘wants’ as optional items like biscuits, sweets or chocolate.”

Ages six to 10

Children in this age group are more aware of money and excited to have it in hand.  They might receive money as birthday presents or in the form of pocket money. It’s in this age group that parents can teach them the principles of saving and money management. They could even have their own bank account and manage it to some extent, but only under the guidance of their parents. At this age children can make decisions with money, compare prices and learn how to save.

“Teaching children to save isn’t as hard as you might think. Children have an amazing ability to grasp concepts, especially when you turn a concept into a physical action like having a piggy bank. Taking a coin or two and dropping it into a piggy bank regularly is the first step to educate your child on the importance of saving a portion of their money instead of spending it all,” Sibiya says.

Ages 11 to 15

Your child can now understand more complex concepts about finance. “Teach your children that they need to save a portion of any money they get, whether it’s birthday money or money they received for doing chores around the house.  When they reach their savings goal, they can be rewarded accordingly.  Show them how their money grows when they save, and think about matching your child’s savings to encourage them to save more,” Sibiya says.

Ages 16 to 18

By this stage, it’s important for your child to have a firm understanding of how money works. It’s in this age group they’d want to take ownership of their money and they’d want to transact on their own. It’s important to chat to your children about the responsibility of having money. Parental guidance is still needed to prepare your child to become a financially responsible individual.

“At this stage, introduce investment concepts and the importance of financial discipline.  Children at this age should also be working according to a budget, and be able to manage it with guidance from parents,” Sibiya says.

Older than 18

Children at this age should be as financially independent as possible. “If you’ve done your job correctly, your child will be able to manage their finances on a day-to-day basis, have a bank account and be able to use it responsibly, and have savings and use this for basic necessities,” Sibiya says.

“Having a child is a life-long commitment, and avoiding the topic of money and financial management will only do your child and yourself a disservice. The best thing you can do for your child is to raise an independent and confident individual who is financially responsible,” Sibiya concludes.

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