Kids and Money

By Francesca Sidoti
Jan. 23, 2010

Everyone wants the best for their kids. They want their kids to be able to have good relationships with their peers, be reasonably human throughout the teenage years and end up on the other side as a responsible adult.

Teaching your kids about money is one of the most important ways to ensure your kids get through life in the best way possible.

 

Here are some of the best strategies:

 

An allowance

From an early age, it is important that kids understand how to use money and the best way to instill that is for them to have an independent source of income. The actual level of allowance is less important.

I functioned off 50 cents a week for most of my youth, as well as a bit of money every birthday and Christmas.

People tend to differ as to how a child receives an allowance; is it dependant on chores or independent of their contributions to the household?

That’s up to you, but it is crucial to introduce ideas of budgeting and discipline with money whenever you set up an allowance.

 

Big dreams? Big savings plan

Help your kids to develop good saving habits from the start by setting out budgets for big purchases. Kids may spend their money on lollies from the local store at first, but once they realise that long-term saving can result in something like a new lego set or doll, they’ll be able to put their (financial) nose to the grindstone.

If Christmas is coming up, offer to contribute a portion should they reach their financial goals.

 

Help them to invest

My Dolomites account was a stalwart of my childhood, and a big reason why I have any skills in saving now. I loved the glittery ruler that came with it but, most of all, I loved the feeling of affirmation every time I could deposit a bit of money. Dollarmites by CBA is a good start.

Take your kids through the benefits of each account, and each investment idea. If your kids are a bit older, talk to them about term deposits or saving accounts.

 

Talk about it

If talking about money makes you uncomfortable, get over it now. The more communication around money issues with your kids, the better they’ll be prepared. Debt is something every household should know about, and kids (especially adolescents) need to understand what can happen when it gets out of control.

Encourage your kids to steer clear of credit cards for as long as possible.

It sounds extreme, but show your kids how it’s done when you pay a bill or do your tax. These are essential life-skills that get no attention in education. Show them how to write a shopping list, and stick to it.

It’s a harsh reality but a child’s way of saving and spending money will be largely derived from the example of his or her parents. Demonstrate restraint in how you use money, and they are likely to learn from that.

It’s not enough to talk about the starving children in Africa at dinnertime; instilling a sense of the real value of money in your children is essential. So they tell me (childless as I am).

Piggy banks, budget  plans and saving goals are all important parts of growing up, and becoming an adult who can function financially.

It’ll help you financially as well if your kids have a sense of money matters, as it’ll decrease the likelihood you have to bail them out of a $300 phone bill any time soon.

What tips do you give your children in money matters?

 

Source: Savings guide

Editor’s Note: We would like to know what you think. dan@youngchronicle.com