One fundamental task that WE think is important as a parent is, teaching children how to manage their money. It’s not exactly an easy task because different age groups have different financial responsibilities.
In this blog we’ll be sharing ways you can interact with your children, regarding money. We’ll be taking you through the different age groups so your children know how to manage their money at all ages.
0 – 4 years
At this age, money means nothing, they aren’t really aware of what it is! It’s just a magical thing mum and dad have that never runs out. It’s there to buy presents and literally anything the child wants/demands. And if you’re not careful they might even learn that when told no, if they cry and throw a tantrum, they’ll still get what they want! A new toy, an ice cream, that pink sock they found on the shop floor, you name it…
Yes they’re at an age where teaching children how to manage their money isn’t really going to mean anything to them. However, you can still teach them the manners of dealing with it. Such as saying ‘ please’ and ‘thank you’, being grateful for what they’re receiving.
When you go shopping, try paying with cash. This way they start to become familiar little by little how money is used. Even if they don’t understand, they are still being made aware of the action. Children watch, absorb the information and then they imitate!
5 – 12 years old
At the age of 5 they’re going to be more aware of what’s happening around them. In most households by the age of 10 they would already be doing chores around the house. Like for example, tidying their room, helping with the dishes etc, it might even earn them some pocket money! Instilling responsibilities in your child’s life is important for their personal and ethical development. And if they have a little incentive, it teaches them the value of money. It teaches them that you have to work hard for what you want.
As they grow they are going to become more independent. They will start wanting to go places with their friends and not a lot is free in this world! This means they’ll be coming to the bank of mum and dad / carer. However you can get rid of this habit and instead instill a pocket money plan. Thus, teaching them responsibility, to spend wisely and to save!
Teaching children how to manage their money is important so that they can learn the concept of saving from an early age. The sooner the better! Get them a little money box so they can begin managing their pennies. In return, this will prepare them for the future and they won’t bug you as much!
13 – 17 years old
Now they’re moody teenagers it’s going to be a bit more difficult to teach them the responsibilities of money. But if you’ve started from a young age they should already be in the routine! It’s good to teach them that having goals is very important. That the journey towards that goal is even more important. It will stimulate them to learn to be more independent with their finances.
Teach them the difference between necessity and luxury. This means knowing the difference between a game console and driving lessons so that when they are fully dependent they’re able to decipher which is more important. Of course at this age they’re going to want the best of the best to impress their friends! And if they know how to save they can have the best of the best. But, they’ve got to be able to manage their spending otherwise they’ll never get what they desire.
Begin by talking about something they’re really into or really want and go from there. For example, they might be learning to drive. They might be really excited for the freedom of being a driver… however, who’s paying for their car? Who’s going to be paying for the petrol? Everything costs money!
They’re certainly not children anymore, this is where they begin to take charge of their lives! This includes driving, getting a job, if they’re looking to go on holiday with their friends and basically anything to do with their social life! Most at this age already have a bank account which is a big responsibility in itself!
If they have a job, (full time/ part time) one of the first things you should do is set them up a savings account. You can do this online on their banking account. You can even link it to their main account so that every month, say 10% of their monthly wage automatically transfers into their savings account. They can then decide if just before they get paid they want to transfer anymore. Lead them down the path of saving, it’s an important one!
One way in which they can manage their money better is, budgeting. They might be going out with their friends, so teach them to withdraw a specific amount of cash that they’re comfortable taking and this will help them not to overspend. This way they’ll be more aware of how to budget. At least after a hefty night out they’ll know exactly how much has left their bank account… rather than being in utter shock!
Remember, introducing your child to cash at an early age, will make their development and growth process much easier! We hope that this blog has taught you that teaching your children how to manage their money is a smart move. We encourage you to share your experience! Good luck.