Trying to teach your children that money doesn’t grow on trees is important if you want them to grow up learning the benefits of saving money and spending it wisely.
For little ones money is just another toy, but once kids get to about school age they begin to understand that it’s actually something of value and doesn’t just appear out of nowhere.
We’ve all been nagged to death by our kids wanting us to buy them something ‘small’ in stature but is actually a costly item. Kids equate small things with a small amount of money and vice versa, it’s hard to explain this concept.
The best way to impart money knowledge is to do it organically, or as the subject arises. Sure it might take time for them to ‘get it’ but they’ll thank you when they’re 30 and have money in the bank.
5 important money lessons to teach children
1. You have to earn it
If you children are begging for money explain that they have to actually do something to earn it. Continually handing over cash for no reason might lead your kids to believe that money is free. Set up a chore list and even a bonus list that will give them more money if they complete, make these harder ones like washing the car so they’ll see the value in working that much harder.
2. It doesn’t come from a hole in the wall
Few of us venture into an actual bank these days, and often get money out with a purchase or from an ATM in a wall. When your kids ask you to just ‘get more money from the machine’ explain that it doesn’t actually just sit there, instead explain you or your partner have had to work and someone manually put that money in there for you to access in an easy way.
3. Make decisions on how you spend it wisely
The other day we were at a car boot sale and my three kids raced off to spend their $5 pocket money. They blew it in minutes and then wanted more because they had just seen something else they wanted more. I didn’t give them any more money and spoke about ‘buyers regret’ and how they shouldn’t rush into buying something straight away. Often it’s wise to look around a bit before buying the first thing you see.
Hint: Talk about wants and needs, for example they might want a new pair of shoes but they don’t need one. Try help them figure out what’s important in life, for example food and toiletries more necessary than Kinder Surprise eggs!
4. Lots of or lack of money doesn’t make a person better or worse than you
There will always be kids with less or more money than your child and explain that it doesn’t make them any lesser or more important than them. Tell them money isn’t the most important thing in the world and that they should not get upset over what they haven’t got because there is always somebody worse off than them.
5. Save half and spend half
My kids often get money from relatives for Christmas and birthdays and it always burns a hole in their pockets. They want to spend it all and NOW. Try buying them a piggy bank, a tin one that they can’t open, and make them spend half and save half. Explain that in a few years they’ll be able to buy something big and costly they’ve been wanting but you won’t buy for them.
Tip: To encourage saving on a small scale, tell your child you’ll match the money they save if they manage to not spend it in a month.
Read 10 money saving tips every parent needs to know!