One way to empower the next generation for success is giving your kids the tools and knowledge to manage their own money and create a solid financial foundation later in life.
You can easily use everyday activities and chores to teach your children financial skills.
What is money, really?
It’s easy to see how small children might think money comes out of nowhere – after all, they see you drawing cash from an ATM or swiping your card at the shop without seeing what goes into earning the money in the first place.
So, start having conversations around money, its worth and how it’s earned with your kids from a young age. Explain that you work to make money and that the bank keeps your money safe until you need to spend it.
Play games like “shop” or “restaurant”, exchanging ‘pretend’ money for goods or services. Talk about how goods are valued and why we spend money in order to acquire them. You can also talk about how some things are more expensive than others and that we need to save up for them.
You can also introduce a pocket money system from around the age of 5 to 8, where your child earns money for completing chores or odd jobs around the house. It doesn’t have to be anything big, just 50c or R1 per small, age-appropriate job.
Save, save, save
Stop a habit of impulse buying before it starts by teaching your child not to spend as soon as they get money. Delayed gratification is an important concept to instil in this world of instant everything.
Get your little one saving pocket money, birthday money and other odds and ends by using a three-jar system. Keep three jars in their room – one for saving, one for spending and one for sharing (or charity). Every time they receive cash, it needs to be split between these three jars, either equally or in different amounts, and then watch as it adds up over time.
Next is creating a wishlist of things that your child wants to buy with their money. If there’s a toy or something special that they want, add it to the wishlist. Before you go shopping with their saved-up spending money, draw up a budget so that your child knows a price range for each item. Go online or look in shop catalogues for prices, specials and discounts, which teaches them to plan for their purchases before the time. If they don’t have enough for what they want at that time they will need to save some more in order to get it.
However you do it, the aim of this process is to create a healthy relationship with money in your child’s mind so that when it comes to making big decisions in the future, they have the know-how at their fingertips.