Financially savvy kids- a guide for parents

by Laurel Pretorius
Financially savvy kids- a guide for parents
Reading Time: 3 minutes
Teach your children to have a good, healthy relationship with money from a young age and you’ll be setting them up for life. By Laurel Pretorius

Philosopher and entrepreneur Matshona Dhliwayo once said, “Money doesn’t grow on trees, but grows on intelligent minds.” This is important to understand while we teach our children to cultivate a healthy relationship with money.

In fact, the very foundation for financial intelligence begins at home, and we parents play a crucial role in shaping our children’s attitudes and behaviours towards money.

Here are our top tips to help you teach your children about finances, budgeting, saving and spending money.

Start early

Financial education should begin at an early age. Even young children can grasp basic money concepts. Use age-appropriate language and examples to introduce the idea of currency, coins, and basic transactions. Play shop with your them by taking turns being the shopper and the shop attendant.

Set a good example

Our kids often emulate our behaviours. Be a positive role model by demonstrating responsible financial practices. Discuss your financial decisions with your children and explain the reasoning behind them.

Give them an allowance

Give your child an allowance that you can afford to give them and that feels like an appropriate amount. It’s an excellent way to teach them about budgeting and saving. Do encourage them to earn their allowance through age-appropriate chores or tasks. This will help them connect the dots between work and income.

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The business of budgeting

Teach your children to be budget savvy. Show them how to divide their allowance into categories: spending, saving, and giving. Explain the importance of allocating money for different purposes and involve them in setting spending limits for each category.

Saving goals

Help your child set savings goals. Whether it’s for a new toy, a special outing, or a long-term goal like college or a car, saving money will teach patience and discipline. Consider opening a savings account in their name.

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Managing money

As your child grows, involve them in family financial discussions. Explain common financial terms like income, expenses, bills, and savings. Share household budgeting decisions to give them a sense of financial responsibility. Don’t be afraid to talk about your financial challenges with them but show them how to come up with resolutions, too.

Spending wisely

Encourage your children to think critically before making purchases. Teach them to distinguish between needs and wants and to prioritise spending on essential items.

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Banking basics

As your child matures, introduce the concept of banking. Take them to the bank, show them how to use an ATM, talk to them about being security conscious, and discuss the importance of interest and banking fees. This hands-on experience can be both educational and exciting for them.

Visit Opening a bank account for your child

Saving for a rainy day

Teach your children to save money for the extras, such as birthday gifts or holiday money, instead of spending it all at once. This practice will help instil long-term saving habits.

Delayed gratification

This is a tough one in a day and age when kids have become used to instant gratification in so many ways. Use everyday situations to teach the value of patience and delayed gratification. Explain that saving for a bigger reward is often more satisfying than instant, smaller purchases.

Giving back

Encourage a sense of social responsibility by involving your child in charitable giving. Let them choose a cause they care about where they can donate a portion of their allowance or savings. By learning to give a portion of our money to those in need, we cultivate a healthy financial relationship for life.

Room for financial mistakes

Allow your children to make financial mistakes in a controlled environment. Help them learn from these experiences by discussing what went wrong and how they can avoid similar situations in the future. How to raise money-savvy kids

Communicate, communicate, communicate

It goes without saying: always keep the lines of communication open. Answer your child’s questions about money honestly and age-appropriately. Be patient and understanding. Remember that financial education is an ongoing process.

Encourage critical thinking

Foster financial independence by guiding your children to make their own financial decisions as they get older. Let them experience the consequences of their choices, whether positive or negative, but let them know you are always available to talk things through and provide advice.

Imparting financial wisdom to your children is giving them a massive investment for their future lives. So, start teaching them early, lead by example, and maintain open communication to empower them to make sound financial choices throughout their lives.

Also read Help your kids master their future finances

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