In Australia, a recent study by the Financial Literacy Foundation found that less than half of the children surveyed saved regularly and only a quarter did a budget for day-to-day finances. In 2008, the foundation started financial literacy classes in schools for select years to help raise children’s awareness on money management and related subjects.
That’s a laudable move. However, parents too have an important role to help kids to be money-wise. Here are some ideas for teaching kids about money.
Allowance and Kids
Give them some pocket money or pay them for odd jobs done in and around the house. It’s not about how much they make that matters here but rather on giving the kids some direction on what they should do with the money – save or spend it.
This is a four-part money box to encourage children to save. Basically, it has four parts – giving, living, saving and wealthing. The giving and living compartments have lids with hinges for quick access to the money for everyday spending. The saving and wealthing parts are actually secured so that the money is put there for longer terms.
Unlike most conventional piggy banks in which all money is put in one place, the Money-Ed-Box teaches kids about budgeting and money allocation skills.
Rewarding Savings
Match children’s savings dollar to dollar or with a certain amount of money after a period of time, depending on your preference and financial status. With such an appealing incentive, kids are more likely to save.
High-Interest Savings Accounts
Once the children have saved a substantial amount of money at home, open a high-interest savings account for each child. There are specific savings accounts designed just for kids. Check with the local banks and find the best rates.
Talking about Money with Kids
Engage the kids about money often and whenever possible. Talk about the prices of daily goods purchased, how to pay bills, budgeting and saving money. Teach them about branded and non-branded goods, sale and non-sale items and encourage them to compare prices before buying anything.
When withdrawing money from an ATM, explain to a very young child that it is hard-earned money, not money that comes out simply by pressing a few buttons.
Part-time Jobs
Older children can also do part-time jobs after school to learn more about money management. There are many ways for kids to make money. All they need is some encouragement, support and guidance from their parents. When they make their own money, they are more likely to be more careful and will stretch their dollar further to buy something they like.
Although some schools will include financial literacy lessons in the classroom, parents should also play an active role in teaching kids about money. Giving them pocket money, using the Money-Ed-Box, rewarding savings, opening high-interest savings accounts, talking about money with kids regularly as well as encouraging older kids to do part-time jobs are some ways to help children to be money-smart.
Found this article useful? Read also Choosing Savings Account for Children.
References:
Hely, Susan. “A Parent’s Role” in Money magazine. Australia: ACP Magazines, February 2008.
Bates, Dianne. Money Smart Kids. Australia: Ibis Publishing, 2005.
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