Articles

Teaching Children Good Money Sense

Jun 02, 2017   |   BY The Editor

Children learn from a young age and some of the best lessons come from their parents and role models. Every time they tag along to the shops, every time you make an online purchase, and every time they see their parents stress or fight over money, they are sponging up those lessons.

With this in mind, what are the best lessons you can pass on to children?

Remember that consistency is key. So is openness. Children absorb what they see, hear and feel. This affects their values, attitudes and behaviour towards everything, including money. Therefore, your reaction to money will affect them, too.

What to teach your children
There are five basics that need to be covered:

– Earn
– Spend
– Save
– Share
– Borrow

Earn
Money does not grow on trees. Sound familiar? It should! One of the most important things for children to understand is that money is not an entitlement. In order to pay for things, one needs money and that money is earned as an exchange for products, services, time, or just hard work.

Working for your money offers a sense of gratification. Knowing that by putting in X amount of effort or devoting X amount of time, you get Y out so that you can buy Z. This gives one a sense of pride and accomplishment. Give children tasks and chores that they must perform on a weekly or monthly basis in order to earn their pocket money.

Essentially the child learns the value of exchange.

Once there is money available, children now need to learn how to Spend, Save and Share.

Save
Rainy days and such come along all too often. Children should be taught that the more you save, the more you will have available when emergencies and special deals come along. By having extra cash available, the need for loans lessens. Teach the child that a percentage of their pocket money must be placed in a piggy bank.

Spend
Of course, there will be times when the child wishes to spend their hard-earned cash. With cash available, they can learn not only how to spend money, but also how to do so wisely. They can start learning the value of items and you can teach them to bargain hunt, compare prices and save their spare change.

Share
When they get their hands on money, they may not be willing to share it with others. However, teaching them that sharing is caring, and giving is better than receiving may turn out to be a good life lesson as well.

Of course, there will be times when the piggy bank is lean…

Borrow
When you take out a loan, you always need to repay the loan, generally with some sort of penalty for convenience. Children need to understand that if they need money NOW and don’t have the time to save for it, then they can loan the amount under a contractual agreement, which they would pay back over an agreed term, with interest.

These very basic lessons can teach children about the value of money, and (in a safe environment) they can experience how having money affects them, as well as the effects of the lack of money.