When we tell you to 'never stop learning', we mean it. Today's article is all about good money habits to instil in your kids (no matter their age). But don't worry - if you don't have kids, these tips can act as a reminder of what's important when it comes to your mindset. After all, 83% of parents would have liked to learn more about their finances when growing up!
With your money beliefs and attitudes formed by the age of seven, it's important that you start your child's financial education as early as possible. Don't worry - we're not telling you to set up a retirement plan for your five-year-old... there are plenty more age-appropriate ways to develop a healthy mindset. For example - recent studies have found that by the age of five, kids had already formed distinct emotional reactions to both spending and saving money!
In today's article, we'll be covering three good habits you can teach your children at any age.
Money has value
Back before credit cards & cryptocurrencies, it was much easier to understand the value of money. Each note had a number printed on it, and that's how much it was worth - easy, right! Today's children have to understand how money has 'value' just by looking at numbers on a screen, and its our job to make sure we bridge this knowledge gap the best we can.
When children were asked why they saved money in a 2018 study, 47% wanted to buy sweets or entertainment products - what would your child answer?
There are a couple different ways that you can approach this...
- For youngsters, showing them the different coins, and having them identify how much they're worth is a great memory game!
- Weekly allowances show how over time, saving money gives them a larger amount to spend on something they really want.
- Visit car boot sales or school fairs, and tell your kid how much they can spend (or if you're using cash, give them that amount at the beginning). As they pick up all the things they want to buy, help them figure out which ones they can actually afford.
In all of these activities, communication is key. By talking through the process and explaining why certain things can or can't be bought, you're reinforcing their understanding of money's value.
Make money mistakes & learn from them
You can probably think of half a dozen mistakes that you've made with your money - that's a good thing. Each mistake contains a valuable lesson, and has likely helped you to develop a healthier, more positive mindset towards your finances. While it's human nature to protect our children from making our mistakes, it's good for them to learn how things could go wrong.
If your child receives an allowance, and wants to blow all their cash on the latest toy or game - why not let them, just once. When the next week rolls around, and they're wanting to buy something new, you can explain to them why that's not a possibility, and hopefully reinforce the message we've already discussed: that money has a value.
A person who makes few mistakes makes little progress.
Money doesn't have to be 'boring'
When it comes to 'taboo subjects', money is still at the top of the list. The historical view that it's 'dirty' to talk about your money prevents us from realising just how much there is to enjoy about achieving financial freedom. The best thing you can do to prepare your children is to make sure they aren't restricted by the same beliefs.
Personalise the way that you talk about money to activities you already know your children enjoy. If they're young, why not buy a picture book with a financial theme? Board games such as Monopoly can also go a long way in teaching the value of money - while also remaining a fun evening!
Bonus tip: donate!
Donating money is a practical way to show the value of money to your kids. Pick a cause they're passionate about, and give them some money to drop into a collection box. A great option for this is animal charities, since many will send you updates or pictures of the animals that you're helping.
With the visual aid of images and stories, your child can start to tangibly see the impact that their money can have on the world. Not only that, but teaching your child to be generous is a great way to develop a positive money mindset!
What are your next steps?
Revisit last years Money Hour with Dr. Mara Catherine Harvey, where we discussed how you can teach your kids about money.
Learn more about your money mindset in our Digital Money School - sign up to access the first module free!
You can change your child's financial future - help us close the knowledge gap by completing our 5-minute survey (and get 20% off SmartPurse as a thank you!).