Looking back at your own childhood, what experiences did you have with money that has led to your current financial habits? Were people around you careful with money or did they spend it like there was an endless supply?
With financial literacy, it’s a good idea to start teaching your children about money from an early age. Here are some ways that you can do so:
1. Be open and honest
When money is tight, it’s natural to keep your loved ones away from your financial woes. However, by sharing stories about past regrets and presenting financial difficulties can actually help your children learn valuable lessons about managing money. How? By showing them how you plan to get your feet back on the ground after a financial issue can actually have a positive impact on your child’s money habits. Teach them the importance of planning (budgeting) and how to prepare for financial success.
This leads on to the next point:
2. Set shared savings goals
This is a great way to teach your children about money where you set a shared saving goal and follow the plan through. This could be by doing something you and your children would like to do together. For example, with summer holidays in just a few months’ time, you could plan some summer activities. Come up with plan to budget and save money together.
If you have older children that are able to work, ask them to come up with a certain amount every week or month. If you have younger children, give them chores to earn extra cash. You can then match their contribution when they supply their share of savings. To make it tangible, keep the earnings in a clear jar so that they can see their savings accumulate. When the time comes, your children will see the ‘fruits of their labour’ and be able to enjoy their summer activities.
3. Show them how money works
Banks now provide online solutions for convenience however make a special trip to the bank with your children to start a conversation about money. Teach them valuable lessons about saving.
Also show them the following:
How to deposit money
How to use an ATM machine securely
On payday, explain to them how the money is used towards food, bills and other expenses.
When buying groceries, teach them how credit or debit card works.
The difference between needs and wants
Make it fun by playing games where they have pretend money and made up transactions. This way they will see how money works and will hopefully create good money habits that will stick with them for life.
4. Be a good example
Children observe and emulate what the grown-ups around them are doing. Showing your children that you have set financial goals, created a budget, made a shopping list (and sticking to it) and finding ways to save money will have an automatic positive impact on how they perceive your attitude towards money.
5. Get a money mantra or money script
Before instilling a money script in your children, you need to identify the money mantra that you currently share and evaluate whether a change needs to be made.
Start a money journal and write down the way you feel and think about money. After you have improved your money mantra, it can become easier to change your behaviour after which you can share a money mantra or script with your children.
By talking to your children about money, they will understand the value of money, have a positive relationship with money and have better money habits.