If the state of the global economy has taught us anything, it’s that our children need to know about the value of money as early as possible. But is there such a thing as being too young to learn about cash?
Money (or lack of it) consumes our brains daily as adults, but there are some that believe children should be free from the burden of having to worry about cash.
Others think that understanding money early could significantly help a child in later life.
There’s no denying that money controls the lives we lead and the choices we make. If your child doesn’t have a firm understanding of how money is earned and spent early on in life, the consequences later on could be harsh – with potential debt issues occurring that could lead to even further serious social problems.
When should you begin? Children start to learn about money at a very early age simply by observing the transactions their mum or dad makes in a supermarket. As a start, it can be good for your child to gain confidence with money by taking it up to the counter to pay for an item. It’s also fine at this stage for you to say that something costs too much and there isn’t enough money to buy it. This can be a very powerful message, and the first step in the development of your child and their understanding of cash.
Growing up with cash. As children go through their first few years of school, they start to understand the way money works. You can teach your child about saving for things they want, and to understand that if they put some work in, they can gain rewards. Giving money in exchange for simple chores around the house can make your child see that money is not simply given out, but earned.
Their teenage years will be about peer pressure and this is when the ‘I wants’ really start to kick in, often to keep up with friends. Parents still have to take some control and lead the way, though. For example, if your child gets $50 a week in pocket money, take $10 out and put it into a bank account. They’ll thank you for it later on when they can afford their first car.
Put it in their language. Money matters can sometimes be complex to explain so keep it nice and simple. If you want to explain about stocks and shares, Woolworths may make a better example than the latest technology company.
If you or your child happens to have shares in the supermarket, then the next time you go to buy your groceries, you can tell them ‘you own part of the supermarket’. It’s very easy for them to understand.
Money can also be a difficult concept to make concrete in this day of online banking, credit and debit cards. Although it’s a smart way to make the payment for daily purchases, to your child it might appear cost-free. To overcome this, show them the bill and the bank statement, pointing out an item that was purchased and explain how the process works.
Spend now or save for later? One of the vital money lessons you can teach a child is about the value of ‘choice’. You can illustrate this point by telling your child that if they decide to buy a lot of little items now, they won’t be able to get that bigger item, such as a bike, for their upcoming birthday. This makes them think about what they want.
While personal finances cause most adults quite a bit of stress, educating your children will help them grow up to be less anxious and more financially secure adults.
This information is current as at 15/08/2016.
This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. Information current as at 26th May, 2015. These projections are predictive. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections.