Budgeting – Now that my kids are old enough to enjoy the pleasures of shopping, I constantly find myself having to remind them that money doesn’t grow on trees.
So how do you teach the young ones to grow up appreciating the value of money, and being responsible in their spending? Teaching your kids how to manage money can set them up with good financial habits for life. Here are a few basic tips on how to help your child develop a healthy financial foundation:
- Help your child understand the relationship between earning money and the decision how to spend it best, by discussing working to earn it, talking about how to save money and how that will contribute to spending wisely. A good example will be how cooking dinner instead of buying takeaway food will save money, which can then in exchange be used towards a family holiday.
- Teach your kids the concepts of value, earning, spending and saving by means of giving them some pocket money for weekly chores around the house. Let them make their own decisions and mistakes on how to spend it and they will soon learn how to spend it wisely.
- Credit card, EFTPOS and online shopping have resulted in a less transparent way of spending, which makes it harder for kids to grasp the value of money, because they don’t see money being exchanged for purchases. It is important to talk to your child about what is happening at a cash register when you swipe your credit card or EFTPOS. When you withdraw money from an ATM, explain to them that it is your money that you have earned and saved. Explain to them that the bank keeps it safe for you and that you need a special pin to access the money.
- Teach your kids about budgets by involving them in discussions about your family budget. Talk about the concept of having a certain amount of money available each month and how this money is spent. They will better understand the costs of family life and how much can be saved by budgeting.
Senior Accountant, Optima Partners