Budgeting doesn’t come naturally to many adults, but you can give your children a head start with simple activities to set them up with good money habits for life.
In the lead-up to MoneySmart Week (September 1-7), Teachers Mutual Bank has compiled a list of fun ways to teach children the importance of saving.
The Chief Executive Officer of Teachers Mutual Bank, Steve James, says money-management lessons are among the most valuable skills parents can give their children.
“From pre-schoolers to teenagers, it’s never too early – or too late – for young people to learn these critical life skills,” Mr James says.
“Even if your own financial history has had its share of ups and downs, showing your children how to budget and save for things they need can ensure they enter adulthood with healthy money habits.”
Tips to help raise money savvy children:
Infants and pre-schoolers (ages 2-4)
- Have fun putting money in a piggy bank, or use clear jars so they can see the coins piling up.
- Play “shops”, letting the kids practice counting, spending and handling money.
- On shopping trips, show the difference between what they can buy for $5 and $10.
- Talk about the difference between what they want and what they need.
Primary schoolers (ages 5-11)
- Consider introducing pocket money around the age of five. Pay on a set day each week, and only pay an amount you can afford.
- Decide whether you want to link pocket money to chores. If you do, draw up a jobs chart and pay a small amount for each job they do around the house.
- Encourage saving by setting up three piggy banks – or clear jars – labelled “saving”, “spending” and “giving” for donations to charity.
- Take advantage of special children’s bank accounts.
- Teach your children how to read bank statements and household bills. Discuss the family finances and try to set a good example for sticking to budgets and saving for special occasions.
- Find out what they want to buy and help to think of ways to earn money and save up for whatever it is. As extra encouragement, consider adding to their savings when they reach a set goal. Stick up a picture of what they’re saving for as extra incentive.
- Discuss advertising and the ways it tries to make you buy things you don’t need.
High schoolers (ages 12-18)
- Set up at least two bank accounts: one for spending, one for saving. This makes it easier to keep track of their finances.
- Log on to online banking together, and encourage them to become familiar with reading balances, seeing how interest is calculated and making the most of the bank’s online tips.
- Send children to the shops with a shopping list and a set amount of money and tell them they can keep the change. This can lead to discussions about different brands, buying in bulk and buying items on sale.
- Discuss the cost of having a mobile phone, including differences between plans and how to use apps to keep track of their bill.
- If your child really wants to buy something before they have saved the money, consider offering them a loan – and charging interest. It’s a good lesson to learn early, and might encourage more self-control down the track.
- For high-schoolers with part-time work, help them draw up a budget for their wages, detailing how much they want to spend and save.
- Encourage them to read the business news and even play online share market games.
- Talk about some of the financial management challenges you have faced, from buying your first car or property to saving for a holiday.