Kids, Money and Learning
Children have an incredible ability to learn. They are more absorbent of knowledge than most the most effective sponges on earth. If you don't believe me as any 8 year old about their favourite things. I found out from 3rd grader last week more about dinosaurs than I could have ever imagined.
Primary school children who have learn to add and subtract often love show off their new skills. I remember being 11 years old and I would ask people their birthday just to work out how many days they had been alive.
What better way to allow your children to show off their new skills with numbers and teach them about the important of money than by teaching them about the importance of saving.
Here are some of her tips for parents to assist in drumming key money messages into children.
Teach children how money works
The most important message is the need to work to receive money.
If pocket money is linked to chores, children will appreciate that they get rewarded for effort.
I would avoid paying for basic expectations like keeping their room tidy (as they get older, it is very unlikely they will get paid for this) and keep it to big tasks that they otherwise wouldn't want to do.
Second, children must learn to make decisions about what to do with that cash – how much they should save (and later invest), and how much they should spend.
Encourage families to budget together
Parents are powerful role models when it comes to financial literacy. But as well as being conscious about what messages your own behaviour is sending, you can also set up specific learning exercises.
Track what you spend each week. Put up a whiteboard and, for every person in the family, write up what they’ve spent during the week. Set a budget and try to keep within the budget.
Explain the dangers of a cashless society
In the past, parents used cash for many transactions. Children could see the money being spent, and how much was left over.
Now it's not so clear.
You don’t see the money come out of your bank account when you pay with tap-and-go or other similar payment options - and neither do your children. Explain that although you are using a card, it is still your money being spent.
Set up a bank account
Your child can have a bank account in his or her own name after the age of 14, along with a debit card. Encourage children to deposit pocket money, or cash gifts, into the account, and withdraw as needed.
Open the door to investment
Teaching children about investing can have two significant benefits: they may better understand their parents’ financial decision-making and it may set them up to make informed financial decisions later in life.
The power of compounding works best when it is allowed to work for years upon years, starting with a small investment in an index fund or ETF and allowing it compound and grow will produce great returns with enough time.