It’s never too late to start encouraging children to be interested in earning money and the value of saving.
Teaching children early in life about money management will give them an enormous advantage in their adult life.
Children can gain financial independence in adulthood from the solid foundation created when they are young.
- Children between the ages of 5 to 9 have limited knowledge about the value of money. Playing a game like ‘shopkeeper and customer’ is a good way to help children learn about money. A parent can play the shopkeeper and the child can be the customer or vice versa. Encourage children in this age bracket to help with shopping lists and talk to them about the cost of items at the supermarket. When shopping, let them hand over some money to pay for the items purchased. Children may be given an allowance at this age. When paying children an allowance, it is helpful to pay them with a mixture of notes and coins. This will enable them to easily divide their money between spending and saving. This is a good time to open a savings account to start the process of learning to save.
- Children between the ages of 10 to 15 start to have a good understanding of money. Typically this age group love to spend! Many children in this age group have opportunities to earn extra money from jobs such as babysitting and cleaning. It is a challenge to encourage children at this age to save; therefore, a gentle approach is needed. Encouraging them to put as little as 10% of their earnings into a savings account will help develop their understanding of financial management. Teach them not to rush into impulse buying but instead shop around for value and quality. They start to have a curiosity about what their parents earn. Discussing your income and expenses shows children that money cannot be spent without proper planning and a household budget.
- Children over the age of 16 have a real desire to earn additional money. Encourage your child to look for a part time job, such as working in a fast food restaurant or supermarket. This is the time they will learn about taxes. Explain to them that tax is being taken out of their pay check to help pay for government services. Guide them to divide a portion of their income to use as spending money and a portion to be set aside into their savings account. It is a good idea for teenagers to have a long term savings plan. This enables them to see that they are working towards a goal. This goal could include saving towards a car or their education.
Pocket money is a great way to teach your child the importance of working to earn money. Basic chores can be done by children as young as 5, then chores increase in number as the child gets older. Once a child reaches the age of 16 they should be able to assist with any chores that are required to run a household.
Chores for children aged 5 to 8:
- Set and clear away dinner table.
- Empty the dishwasher.
- Help to feed a household pet.
- Dust their room.
- Make their bed.
Chores for children aged 9 to 15:
- Hang out laundry.
- Help prepare family meals.
- Vacuum several rooms in the house.
- Put away groceries.
- Help to wash the family car.
How much pocket money should a child get paid? A basic rule of thumb is $1 for each year of the child’s life. This may not always be possible depending on the family’s financial situation or the number of children in the family. It’s important to set the amount at what is affordable, thus still enabling the child to learn the principles of working to earn money. Each year on their birthday they get extra chores along with a pay rise.
Communication is the key to a child learning about financial management. It is important to talk to your child, whatever age they are, about all aspects of a household budget. Children learn by example, so let them be part of the process by openly discussing the household finances. When children participate in the running of a household, they gain self respect and grow in confidence. By having responsibilities, they feel they are an important part of the family.
Financial knowledge is a valuable tool for children to learn. It will help them to build a better future for themselves and create a strong sense of achievement.
Do you agree that financial responsibility is one of the most important lessons for children? What is your experience with teaching children about financial management?