8 Money management lessons that will set your children up for life

8Money-management lessons that will set your children up for life

It’s a fact: children learn from their parents. So, before you dispense financial guidance, take a moment to examine your own relationship with money. Do you have a budget? Are you in debt? On what do you spend money?

By Catherine Eden

If you can help your children grasp the concepts of prioritising, investing in their future and living within their means, they will thank you one day for the skills you have shared.

Not sure where to begin? Use these tips to get the budget ball rolling in your home.

1Identify values

People spend disposable income on what they value most. Your children have different personalities and preferences. What would they like to save for?

To encourage impulse spenders to save for a special item, give them a target and pledge to match it. Show your children that spending a little of what they have can buy them a whole lot of fun. It’s all about balance.

2Give them control

It’s not how much pocket money they get that matters. It’s the concept of having a modest sum that they can spend as they please.

Explain value for money and the idea of saving for something worth having. Discuss their choices, but let them make their own.

They’ll soon learn not to waste money on worthless junk. Hard lessons teach us not to repeat mistakes.

4Encourage them to save

Provide a piggy bank or set up a bank account for children who decide to save some pocket money.

Explain how interest works and keep a record of their savings in a notebook or on a spreadsheet so that they can see how the total grows. Even if it’s just a few rands a month, putting a little aside teaches children to plan for the future.

3Demonstrate affordability

Small children love to play shop. It’s an excellent way for them to learn the relative cost and affordability of items.

Set out differently priced treats on a tray and give them enough money to buy one or two. They will learn to be discerning. Is it worth spending R1 on a cupcake when marshmallows are just 20c each?

Decisions, decisions!

5Create earning opportunities

Set age-appropriate chores for your children (tidy your room, feed the cat, bring in the laundry), so that they learn about contributing to the household.

Pay them for doing chores – washing windows, the dog or the car – to teach them that it takes time and effort to generate income.

They will grasp the meaning of “money doesn’t grow on trees” when they have had a taste of working for it.

7Distinguish between 'need' and 'nice to have'

Children are bombarded with marketing. But they must learn that they can’t have everything they see.

Remind them that they have what they need and that the nice-to-have may appear on their birthday – or they can spend their savings. The craze will probably pass, but if they are willing to wait or buy it themselves, chances are they will value the item more.

6Expose them to investments

Consider giving your teens a small monthly investment allowance, in addition to pocket money. Discuss trends and their concerns, and suggest a few promising investment options.

Perhaps they’d like to invest in companies that are solving climate change, thereby supporting a good cause while hopefully making money for their university education. It’s a great way to learn about risk, as well as about what you can gain if you practise a little patience.

8Teach them to share

A good way to teach your children the concept of 'enough' is to ask them to donate one toy or possession before a new one is bought.

Using some of what you have to benefit others is an important life lesson, even if you have very little. Explain the flow of giving and receiving, rather than hoarding. 