It’s never too early or too late to start working with your kids on forming healthy habits. The following are a range of techniques you can use to teach preschoolers and the concept of money:
1. Replace the piggy bank with a clear jar for savings
Piggy banks look great, but they do not give kids a visual representation of savings growth. When using a clear jar instead of a piggy bank, it makes savings visual which is their key learning sense.
2. Set a good example
Research by Cambridge University found that children form their relationship and habits with money by the age of 7; like with many other behaviours and traits, they learn directly from observing their parents. It is important when they are watching not to tap the plastic casually without reviewing the bill, and conversely, do not argue about spending, especially with your spouse as there is a high chance they will carry this behaviour into adulthood.
3. Demonstrate the value of money
When a child see's something they desire, tell them they can have it, but will have to sacrifice something else to get it. This demonstrates value and is much easier than giving a lecture.
4. Shopping lists
Always create a shopping list before going to the store and ask your kids to help you identify necessary items for the home- and then when you are at the shops: stick to it!! This may be harder for you than the kids, but it is worthwhile!
5. ‘What is money for’ list
Create a list on chart paper with your child about the purposes of money. This would include food, clothes, toys, give to others, house, water, electricity etc.
6. Pocket money for simple jobs to do around the home
We suggest using pocket money as a learning tool from an early age so you can teach your child the value of money. This can be for either a reward for doing chores around the home, teaching them the link between reward for work and imparting basic saving, budgeting and investment skills. Make chores also a fun thing for them, its important that they do so we suggest the chores to be completed regularly so it becomes part of their daily routine, this could be making their bed every morning and putting their toys away every night.
A good rule of thumb is $1.00 per year of age per week. So if your child is 6, they would receive $6 and the condition of this would be that they have to put $2 of that into savings. We recommend an iTrust investment account which is part of the global Magellan fund. They can log onto their iTrust profile and view how much each week their account has grown with our educational modules. Investing is a great way for children to learn that they have the chance to earn more when they invest. It also gives them practice in delayed gratification. This leaves the child with $4 to spend or save.
iTrust was born out of the frustration of baby & child gifting, and the realisation that investing is designed for the wealthy. Giving gifts to kids and babies is difficult, most gifts are just landfill in waiting, with an almost incalculable carbon footprint of plastics iTrust allows Parents, Family, and close Friends to all contribute money to the same account which maximises growth and reduces fees.