The struggles caused, for many of us, by the Covid-19 lockdown has taught us a few simple lessons about money:
If you borrow, you’ll have to pay it back.
There’s no such thing as a sure bet.
If you can’t afford it, you might be better off not buying it.
When you put it that way, these are lessons that young children could learn - and benefit from.
Many of us feel conflicted about teaching our children to be financially savvy, almost as if there's something unpleasant about talking about money with or in front of the children.
If you feel that way, chances are you were brought up in a family that considered money not a conversation for polite company.
Build savvy habits in childhood
But there are sound reasons to talk to your children about money says Vicky Dyason, director of Financial Fitness Services, a Sandton-based company that advises clients on their financial needs and behaviour.
"I see people in their 20s who are very financially astute, with a sensible attitude to money, and without exception, they got their good habits from their parents when they were children and teenagers. But I also see a generation that is very heavily in debt. They generally get that from their parents too," she says.
The financial habits we acquire and the lessons we learn in our birth family are the basis for financial behaviour later in life. Just as we try to teach our children good eating habits, good dental hygiene or appropriate social skills, so should we teach them how to look after their money.
Don't burden children with adult concerns, but do introduce the fundamentals that will be built on throughout childhood.
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Educating and motivating children to become smart consumers and good investors will empower them throughout their lives. If you plan to teach your child some financial sense, start by thinking about your attitude to money and your money habits (good and bad!). Remember you're your child's greatest role model when it comes to money, says Vicky.
A back-to-basics approach
"If he sees you pull out a credit card every time you want something, he learns instant gratification. If you tell him that you will be saving up for four months to buy a particular item, you teach him about saving."
"Parents sometimes keep children busy with 'stuff', extramural activities and outings, but you don't always have to do that. Think about having hobbies at home, which also gives you family time together. It's a back-to-basics approach that will teach your children that you don't have to spend money to have fun."
Another piece of advice is to start an investment in your child's name from the time he's a baby. Vicky says this is a lesson, as well as an investment.
"Show your older child or teen the statements, explain how you started early so that it would add up to enough money for him to go to university. You are setting an example."
Games and exercises to practice
Children as young as two or three-years-old will enjoy feeding coins into the slot of a piggy bank. Try to find a see-through one so that your little one can see it filling up with coins. Even a jar will do. For littlies, give your child your loose change.
When your child is three or four, give him a fixed amount, say a R2 coin every Saturday. Let him know that when the piggy bank is full, he can decide what to buy with it. It's the first lesson in saving and it's great for hand-eye coordination too.
Know the coins
Your preschooler will be interested in the different sizes and colours of the various denominations.
Tip out your change purse and look at the different coins. Note: Wash the coins first, and your child's hands when the game is finished.
Here are some games and lessons that use coins - introduce them when they are age-appropriate:
- Point out how the number of rands or cents is imprinted on each coin. Talk about which are worth more and which are worth less. Look at which coins are bigger and which are smaller.
- Play a sorting game where your child has to put them in size order. Older kids can put them in order of value.
- Do coin rubbings by placing a piece of paper over the coin and rubbing gently with the side of a wax crayon until an image appears.
- Playshop - a play cash register with pretend money is a toy that gives hours of entertainment and is useful in learning about money. Setting up shop is a fun activity all on its own - choosing merchandise, making price stickers, arranging the stock.
Take turns to be shopkeeper and customer. The customer gets a certain amount of money to buy whatever she can afford. The shopkeeper has to tally up the shopping and give change.
This game can be adjusted to suit the age of the child.
In the beginning, each item might be R1. As she gets more proficient at adding, prices can be R2.
For older kids, you might have price tags of R3.50 or R11, giving them a stab at more complex addition and subtraction.
It's great for maths skills too!
Four money lessons to learn
Lesson 1: There's a difference between wants and needs and wishes
Of course, toddlers are in a "see it, want it" stage of development, which is entirely age-appropriate.
But gradually they need to learn that there are some things that we need (like food) and others that we want (a new dress). Other things are more like wishes (a pony).
Many of the things that are marketed as "needs" are actually "wants".
Lesson 2: You can't have everything you want, and you can't have everything NOW
This is a tough one for toddlers!
Tiny babies need to have their needs met pretty much instantly, but gradually, older babies and toddlers learn to tolerate a little frustration and to wait a few moments or minutes before having their needs met.
So, you might finish what you're doing before getting the baby's food, for instance, meaning that he will wait a few minutes. Learning that he can't have everything that catches his eye is the basis for making good spending decisions later in life.
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When your child is a little older, he will start saving for things that he wants. You can't always have what you want when you want it, but sometimes you can wait for something and work towards it.
Delayed gratification can even feel better.
With credit cards being so freely available, it's quite easy for adults to have whatever they want, right now - but we all know that the consequences can be very serious.
Remember, you can recognise and empathise with your child's feelings even when you deny him what he asks for:
"I know you want the Batman suit and feel upset that you can't have it, but we already have a Spider-Man outfit. Shall we go home and put that on and play superheroes?"
Lesson 3: Money is a finite resource
All spending and saving decisions are about choice: "I have this amount of money, now what do I choose to do with it?"
Children see you take out a wad of cash in the supermarket, or hand over a credit card in a coffee shop. It's not hard to see why they imagine your pockets to be bottomless.
You see the consequences of this as children grow up - for example, if Hayley loses her school hat, she'll say: "But you can just buy me another one."
A good way to teach this lesson is to involve children in making choices when you are out shopping. You might say: "We can get one bag of fruit today. Which do you fancy, the apples or pears?
With older kids, the choices can be more open-ended and can include the concept of keeping within a certain budget, a fixed amount of money.
So, when you go to the movies you can say: "We have R60 to spend on snacks. We can share popcorn and each of us get a juice, or we can get a slush each."
As they get older, children benefit from knowing that their parents prioritise certain spending (a bond, school fees, the phone bill) over others (entertainment, holidays, new clothes).
Lesson 4: Money comes from somewhere
Young children tend not to think about where the money comes from, or question whether there is enough of it. If you say you won't buy something because you don't have money for it, a child will often say, incredulously, "Well, just get some from the ATM!"
Money seems to just appear magically, but we need to teach kids the old lesson that "money doesn't grow on trees" (or from the ATM).
Explain to them the relationship between work and money - "Mom does her work, and the company pays me money for doing that work. Then I use that money to buy food and clothes for us, and petrol for the car."
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