Parenting
Teaching Kids Financial Literacy
Talk to your kids about money You don’t need to be a money expert to teach kids about money. There are opportunities to start a financial conversation every day, at home or out and about. Always be open lay the groundwork to thinking about where money comes from, how it is spent, and how budgets work. It’s important that children learn early that money has to be earned before it can be spent, and that spending often needs to be prioritised.
Earning money Your child knows you go to work, but depending on their age, they may not understand why. Let them know that you get paid a certain amount of money for the work you do. Your employer is effectively buying your time and skills. We cannot survive without an income, so talk to your child often about the work they would like to do when they grow up. Explain that some jobs are better paid than others, and finding meaningful employment that satisfies their personal wants and financial needs is important.
Raising financially literate kids begins at home, and the sooner you begin shaping your child’s relationship with money, the better. Here are our tips to teach money management to your child.
A need is something essential, like new school shoes, but toys and games are wants. Learning the difference while young can help your child better manage their money when they get their first job. Ask your child to wait three weeks to see if they still want the new item they are pleading for. Quite often, they have changed their mind about it in that time frame and decided they don’t ‘need’ it after all!
Bills, bills, bills
Bills are a grown-up’s concern, but their existence shouldn’t be hidden from kids. Children are often unaware just how many bills are received each month. If your teenager has a mobile phone, or a habit of leaving lights on, show them the bills you pay and how many days you work each month just to meet those essential bills. Be sure to include rates notices, car registrations, household insurances, grocery bills, mortgage or rent payments etc. The cost of living is scary – don’t let it be a shock to your child when they eventually leave home!
Help your child equate earning and spending with conversations like “I would have to work for 90 minutes to be able to buy that item”.
Spending money
Unlike pocket money, the money you earn has to cover essentials first, like housing, food, electricity, transport, and clothing. If possible, some money should be put aside and saved for emergencies, too. Any leftover money can then be saved or spent on things that are nice to have, but not important to have.
Needs versus wants
When your child asks for something, remind them to consider ‘need’ versus ‘want’. Children will often say they ‘need’ something, when in fact it’s something they want rather than something they can’t live without.
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Your Local Families Magazine August / September 2022 www.familiesmagazine.com.au
