Introducing financial literacy into the home doesn’t have to be an onerous task. With these simple activities, you can ensure your children grow up to be money-mindful adults.
Tailor your conversations to your child’s age
As soon as your child can count, they can begin to understand the concept of more versus less.
Starting the conversation about money and where it comes from at a young age can begin develop their thinking about finances and help shape their habits early. Initial conversations could be around counting change together and then, as they get older, encourage them to be involved in budgeting for things like a weekly grocery shop or the family holiday.
Allow your children to earn money
The age of your child will depend on the level of responsibility you can give them in exchange for some money. For younger, primary school aged children, chores like helping to wash the car or making the bed may help them to understand the exchange that takes place. As your children become older, more independent and have a desire to take on more responsibility, they may like to gain employment after school and of a weekend. In either case, helping your children set up a bank account and understand the value of work is an important part of a financial education.
Let your children make spending decisions
Once your children start earning money, they are going to see it grow and grow, and eventually, want to do something with it. It’s natural for a parent to want to guide these decisions but it’s an important part of the learning process to ensure that these decisions are left up to the child.
Prompting questions like: “How much do you have, do you have enough to purchase that” will ensure they are left to make the decision. The school canteen is another great way for children to understand how transactions work and the value of money.
Saving by comparing
Depending on the item your child is purchasing, the pricing or marketing related to that item could be misleading. In a recent blog we expressed the importance of critical analysis skills for children and financial literacy is no exception. Show your child ways to compare products – is the price comparable to the size? If you spent $35 on this, is it the same value to you as if you spent $35 on something else? Is it a ‘nice to have’ or a necessity item?
Teach your children about the value of giving
There is an intrinsic satisfaction that comes with giving and helping someone else. That feeling is often worth more to us than the dollar value.When your children start earning money, you could take some time to talk about an issue that is important to them and help them budget to support it each month. Whether that be giving some time each month and budgeting for a week of less income or providing some financial assistance to support the issue and getting into a routine of giving.
Don’t forget about education around credit cards
You may get surprising responses when you tell your child they won’t be getting what they want at the shop. “Just swipe your credit card” is a common one, and certainly an indication that there are some knowledge gaps that need to be filled. Identifying the difference between a credit card and a debit card is a good place to start. Educating your children about the consequences of credit cards, particularly if you don’t pay by the deadline and how this affects your credit score, is also an important conversation.
The kids will have questions so know your jargon
Cryptocurrency, Bitcoin and BlockChain are all words your children have probably heard in news headlines or have become accustomed to hearing about across social media. For young adults, it’s a pertinent time to explain what these words mean.To help you, a quick Google search will bring up a number of resources. Be sure to choose your resources wisely as there is a variety of information available about these topics. Be selective when choosing learning aids to ensure they reflect your understanding of the currency and what you want your kids to know about it.