Raising children, by all reports, is equal parts mania and joy. For every sleepless night, there's going to be a time when you can't stop laughing at something they say. You watch them take their first steps, have their first day of school, just as you have your first argument and impart valuable life advice. Here are some good ideas for your early childhood education about money.
1) Put some of everything into a dedicated account
Research from Roy Morgan shows that on average, kids in Australia receive $11.27 per week. It could be pocket money, or payment for doing the dishes, or even after-school paper runs that contributes to this. But how should they use it?
Only 40 per cent of young respondents to Roy Morgan's 2013 survey said they put money in the bank. By setting up a savings account and teaching kids to put even 10 per cent of their money in it every week, they can quickly learn the value of budgeting and putting funds aside.
It sets them up for healthy savings when they start earning full time wages, and putting money towards something like a home loan.
2) Make it physical
How do you spend your money as an adult?
How do you spend your money as an adult? Almost all of us use cards of some kind, and internet banking has made the idea of invisible funds even more prevalent. But do your children understand these concepts?
By making your pocket money cash or coins, you give children something tangible to play around with. They can put money in a piggy bank, and physically see their savings grow. It might not accrue interest but with rates so low, the returns on $20 in the bank are going to be minimal. Also, it might be too early to teach kids about interest rates!
But with savings benefits they can see, they will quickly learn the rewards that come with being patient and not spending all of their money.
3) Explain the shopping
Kids love to ride around the trolley at the supermarket, even if they don't understand exactly what's going on. But with a little bit of explanation, you might be able to help instill some good financial habits. By explaining the difference in prices for items, and why you are buying certain things, you might be able to help them develop solid budgeting skills.
They might even get a bit of maths practice in, by working out how much cheaper or more expensive certain items are!
4) Make them manage their bills
As kids reach high school age, a smart phone is going to become a fundamental part of their life. In fact, the Australian Communications and Media Authority notes that 29 per cent of smart phone owners already exclusively use their device for internet.
Even us grown ups need our own financial advice from time to time
With this in mind, making high-school-age kids responsible for their own phone bills could be a good way of teaching fiscal responsibility. With a pre-paid account, they don't run the risk of bill shock and can learn to budget $20 per month to their texting and calling.
There are so many ways you can teach your kids about money, and starting early will instill valuable habits. You might even get yourself into a routine by going through the practices with them! However, even us grown ups need our own financial advice from time to time. That's where the team at Yellow Brick Road can help you.