8 Tips to Raise Financially Savvy Kids
Are you raising your children to be financially smart?
We’re living in a time where most financial transaction is cashless – as of June 2019, there are 19.1 million credit card accounts which accounts for almost 76% of the entire Australian population.
The prevalent use of bank cards or credit cards limits the children’s exposure to the actual physical exchange of money.
This might be one of the reasons why understanding where the money comes from and the effort and hard work it takes to obtain it is becoming foreign.
As parents, it is important to reinforce a few simple strategies to help kids appreciate and value money as early as they can.
KMT Partners has 8 awesome tips to aide you in providing smart financial lessons to your children regarding money management!
1. Talk to your children
Talk to your children about money from a young age. This will help develop the concept of what it costs to buy things.
Everyday activities such as using the ATM, filling up your car at the petrol station or doing your grocery shopping are easy ways to start the conversation about the use of money.
2. The value of work
You can teach your child about work in exchange for income from a relatively early age.
Simple jobs such as stacking or emptying the dishwasher, sweeping the veranda or washing the car in exchange for a few dollars per week set the precedent that in order to get money for the things you would like to buy, it takes work.
3. Consistent pocket money
The idea of pocket money introduces the concept of saving. Encourage your children to set a goal such as saving for a toy or activity they would like to do.
This requires them to decide how much of their pocket money they would like to put away and ‘save’ for the toy each week (their long term goal) and how much they would like to ‘spend’ at the time.
Perhaps get them to divide their pocket money into three different jars: ‘saving’, ‘spending’ and ‘sharing’. Hopefully, the reward at the end helps to put the notion of ‘saving’ into a positive light.
4. Finance at the Household level
Teaching your children the difference between the essential costs of everyday living and treats that fall into the ‘want, not need’ category encourages a smart and realistic school of thought.
Ideas to demonstrate this might be taking your children/early teens along on the weekly grocery shop which shows what is spent to feed the entire family for a week.
Contrast this with giving your children a budget to work with to organise a treat such as how to spend money when organising a birthday party or perhaps a family outing.
This way you might also demonstrate an income, what bills and services need paying and what is left over for saving, treats, retirement and so on.
5. More bang for your buck
Educate your teenagers on the benefits of shopping around to find the best deal.
Get them to investigate different brands/options and price points for an item that they really desire to demonstrate the power of shopping around and how much money it can save them.
This can be simple things such as clothes or toys they want, or bigger financial commitments such as mobile phone plans or insurance for their first car!
6. Be the best example
Children are very perceptive – they watch what you spend at the shopping centre or the supermarket and pick up your habits as they do with many things in life.
Therefore it is imperative that you as parents have the right habits and attitudes towards money in order to establish a consistent approach to what you want to teach them.
Our Financial Planning team at KMT Partners can assist you with any of your financial needs including budgeting and cash flow.
Book an appointment by calling our office or sending an email to our office: email@example.com – we’d love to hear from you!
7. Keep it fun
Although financial sensibility is no joke, remember to keep it light and fun where you can so it is not viewed as something big and scary.
8. Get creative
There are lessons to be learned in relation to financial awareness and responsibility in many places!
Teach your kids the skills and attributes involved in being financially shrewd such as discipline, planning, accountability, goal setting, delayed gratification, perseverance and patience. These values will put your children in good stead for a successful career path!