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The money lessons you should teach your children
08 June, 2021
The end of the financial year is fast approaching, and money is on our mind. With our spending and saving habits under the microscope, it’s got us thinking about the ways we can prepare our children for their financial futures. Here are five lessons they should learn.
How to create a budget
It’s a skill many adults don’t even know, but one that your children can only benefit from. Even if they don’t have a steady stream of income, teaching your children how to budget their money will make them more conscious of their spending, and more aware of their means (they may be less likely to buy that $8 toy if they only have $12 in their account). While you probably won’t find a ‘one size fits all’ budget for your children, the Barefoot Investor’s blow (spending money), mojo (safety money) and grow (long-term wealth) approach works well.
How to create a savings account (and watch it grow!)
Banking has certainly progressed beyond the piggy bank, but don’t underestimate the power of this age-old approach. Buying your children a piggy bank of their choice will get them excited about saving, and they’ll love opening it every once in a while to see how their stash is growing. For older children, they may prefer an online option like ZAAP that gives them the power to manage their money with their own card.
How to earn more money
By now, your children know what to do when they receive money – but how do they go about actually getting it? Foster their entrepreneurial spirit from a young age by suggesting things that they could do around the house or your neighbourhood to earn money. In return, support their ideas and motivate them when their inspiration runs low. One of the biggest lessons they can learn early on is that working won’t always be fun, but it is always worth it.
How to negotiate
Negotiation comes naturally to some, but for others, it’s often shied away from. There is a difference between trying to rip someone off, and ensuring you don’t get ripped off yourself, and teaching your children to navigate that fine line is an invaluable skill. Provide them with opportunities to negotiate their pocket money (“Can you tell me three good reasons why I should pay you extra pocket money this week?”) and watch them sail through salary negotiations, car purchases and business transactions in their adult years.
How to spend wisely
Perhaps the most important habit you can teach your children from a young age is how to spend their money wisely – it is all about creating a mindset that they will carry with them through life! Teaching them about ‘needs’ vs. ‘wants’ is key here, and you can explain the difference as you go about your own transactions from day to day (e.g., “I want to buy a new pair of shoes, but first we need to replace our broken vacuum cleaner”).