Bessie Hassan | Money expert at finder.com.au
With the lack of education about personal finance these days, it’s up to parents to teach their kids the value of a dollar. In a world where more and more transactions are taking place digitally, it becomes harder to explain money management without it being confusing or just plain boring for your kids.
However,
by keeping it simple and speaking their language, you can set your little ones
up for greater financial security. Here are four ways you can teach your kids
about good money habits.
1.
Make smart money decisions
There
are many finance-related decisions and experiences that you can share with your
kids to help them understand the value of money. For instance, explaining how
you compare different prices at the supermarket and letting your kids find some
of the items on your grocery list is an easy way to get them started (and it
can cut down the time you spend shopping!).
While
you’re at the grocery store, let your kids hand the money to the cashier. You
can also get them to count the change to make sure everything adds up.
Hopefully, they’ll feel confident enough to do this alone at the school canteen
as well.
2. Let
them earn pocket money
Giving your kids pocket money is one of the best ways to teach them
financial independence. Though you may not want them to slave away doing
household chores, you also don’t want them thinking that money grows on trees.
Each
family will have different strategies in regards to how much each chore is
worth. To keep your kids motivated to earn more pocket money, help them set a savings goal, whether it be a dollar
value or a specific item like a new toy or gadget.
3.
Teach them about physical vs digital money
Starting
off by giving your kids physical money will help them understand the physical
worth of money. However, you do have to explain the concept of digital money
too. For instance, you could show them an Internet bill and explain how long
you have to work to earn enough money to pay the bill. This helps them become
more aware of their everyday actions by understanding the value of work and
money.
Along
the same lines, equipping your kids with online resources will definitely help
them as they grow up in the digital world. This could involve using an online
calculator to help them budget for their goals or using a finance app such
as Raiz to teach them about the power of long-term
investing and compound interest. For more information on Raiz fees, click here.
4. Show
them the consequences of being financially irresponsible
Despite
all these different lessons, sometimes it’s impossible to prevent your kids
from getting into trouble as a teen. It’s important to help them out but not
to pay off any of their debt for them.
They
might have to work extra hard to pay of their debt by doing extra shifts at the
local cafe or saying “no” to a new video game. Showing your child that there
are consequences to being financially irresponsible will set them up for a
better future. It’s better for your kids to learn this when they’re younger
rather than ending up thousands of dollars in debt as a young adult.
— — —
Talking
to your kids about money doesn’t always have to be a burden. With simple
lessons and by allowing them to get involved with the family finances, your
kids will be feel more enthusiastic and prepared when managing their own money
both now and well into the future.
Don’t have the Raiz App?
Download it for free in the App store or the Webapp below:
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