How to teach your kids about the value of money
In an increasingly cashless society, it can be challenging to teach children to value and manage money. Here are some simple ways to help them grow up to be financially savvy.
The increased use of debit or credit cards, internet banking and online shopping means money can take on a somewhat ‘invisible’ and infinite quality, especially to children.
This can make it hard for them to develop an appreciation for what things are worth, and what it takes to earn enough to pay for the various goods and services we use – that the family food shop, the outing to the zoo or the cute pencil case they’d like to buy at the shops translates into hours spent working for an income.
Another potential problem facing parents trying to help their children develop solid money management skills are the unhelpful influences social media and aggressive lifestyle marketing provide.
That said, there are plenty of ways to still teach them the value of a dollar.
Talking to your children about money
Use real life situations to take the mystery out of where money comes from and how it is earned.
When buying items at the supermarket, teach your children how to comparison shop – that each item has a ‘unit’ cost – those tomatoes cost more, but the container is bigger, for example.
At the ATM, you can teach them your money is held in the bank, and when you make a withdrawal, your balance goes down and you have less left to spend.
Preparing the household budget with your children allows them to see how much money your family has to spend every week, and the various expenses that need to be paid. They can also see how money is put aside to save – for bigger expenses like a holiday, or for ‘a rainy day’.
Paying bills with your children
Along a similar vein, children don’t always see the hidden costs in life, for example, how much power the TV consumes that you then pay for, every flush of the toilet and glass of water contributes to your water bill, and the meals cooked on the gas stovetop cost money too.
Sitting down and paying the bills can teach them about household expenditure – you could make it more interesting by setting challenges to drop each bill from month to month so they really explore the contents of your bills and get an appreciation for use translating to your family bottom line.
Giving pocket money
This is a strategy that can be employed from an early age to show the relationship between effort and reward, and that money spent is money gone.
As they get older, you can make pocket money more complex – for example, have daily jobs that are part of being a family member and are unpaid, bigger jobs for money once or twice a week, and less frequent jobs again for extra savings. You can also have your children divide their pocket money into three parts – money they are given to pay for a bus ticket for school and a canteen lunch, money to save per week and discretionary or ‘fun’ money.
Letting them make mistakes
Giving pocket money also gives them the chance to make mistakes in a safe environment. “Allow them to spend their money and don’t be afraid to let them make really terrible decisions. If they want to blow a month’s worth of money on lollies or the newest toys, it’s incredibly tempting to stop them from making a mistake. Instead, give them a taste of what it’s like to run out of money and be broke,” Tong suggests.
And what not to do? Tong says the biggest mistake you can make is to protect your children from the stress of money. “Often, when children get their first job, it’s their first real taste of money and they have no idea what to do. The best place for them to learn about money is at home, in a controlled environment when all facts are available and when they can see the consequences of decisions.”