Educating our children on the value of money and the place that it holds in our lives is something that is often overlooked in parenting. The idea of investing, retirement and understanding the value of basic household items should be something that children are made aware of from a young age.
Start them off early
As a teacher, many of my learners want to find careers that will lead to them being wealthy and allow them to live a comfortable life. Many of these learners also believe that they will be able to do so from just earning a salary. They are not aware of the expenses that come off your earnings and the list of everyday life costs that very quickly lead to a not- so- pleasant bank balance.
Educating children around the realities of money is something that should be prioritised and emphasised in our homes as well as in schools.
5 key lessons
What are some of the lessons that we can teach our children?
- Expose them to the costs of everyday items by allowing them to be involved in some parts of your household budget. Encourage discussion on shopping lists and shopping to a budget. Let them not only understand the impact of purchasing luxuries vs essential items but to experience opportunity costs, ie. not having something as a result of purchasing a want over a need.
- Encourage the use of pocket money and increase the responsibility of purchasing items as they get older. Start off by saying in Grade 4 you will need to purchase your own “special” items such as stationery from Typo or a much wanted toy. Every year, increase the responsibility - Grade 5 you now need to use your pocket money to purchase part of your friend’s birthday gift and so on.
- Introduce the concept of earning interest on money that is being saved as well as interest expense on money that has been borrowed. Let them see the benefits of consistent long term savings by opening an investment account and showing them the rewards. This can also be achieved by having a piggy bank and you adding "interest" if they save a certain amount of money.
- Allow your children to be involved in planning family outings and holidays. One of my favourite projects is giving my learners a budget and telling them to plan a 5 day family trip. It always amazes me how quickly some of them prioritize flying business class and staying in expensive hotels and then they change their options when they realise the cost implications!
- Never underestimate the power of valuable learning opportunities that can take place around the dinner table. Use this time to encourage discussion on developing an entrepreneurial mindset. Bring up women and men that have been successful from not following the normal path, discuss their ideas and brainstorm creative and different business opportunities. Most importantly, teach them to value the failures that may happen and guide them to see the many different versions of success.
But do as I do, not only as I say!
As many things go with parenting, the best learning experiences we give our children is to role model the behaviour that we would like them to have. This is no different when it comes to showing children how money is earned, spent, lost and saved. By being role models and including your children from a young age on money matters you are allowing them to see that being financially savvy is an essential life skill.