Marlies Kappers, a mother and head of marketing at financial services provider, DirectAxis, says while explaining concepts such as budgeting, saving and lending will give children an understanding of how money works, this must be backed by practical experience.
“The earlier children can start learning about money the better, but be careful not to scare or stress them. Also remember that every child is different, so consider the most suitable approach.”
Children respond to what they see and hear around them, so they’re more likely to understand if you explain how the household budget works. Practical experience helps to drive the lessons home. When they earn pocket money for household chores, help them work out a similar budget.
First, they’ll need to pay the bills, perhaps by contributing to a pet’s upkeep or paying for airtime. Take them shopping when you’re buying groceries. Inevitably they’ll want something that’s not on your list and that might be their grocery spend. Remind them not to spend all their money because they still need to save some. Then, if there’s any left over, they can have some fun, go to a movie or treat themselves.
“This first-hand experience is invaluable in teaching them how to practically apply what you’ve explained. It’s also a good idea to let younger children handle cash, under your supervision. Physically handing over hard-earned pocket money and counting the change will make them more confident about handling money and think a little harder about their purchasing decisions.
“Of course, it’s sensible and safer to get older children, who’ll be handling larger amounts, debit cards. Hopefully by then the concept of budgeting and thinking about how they’re spending their money will be ingrained and they’ll be less likely to tap-and-go on a whim. It’ll also teach them how to manage a bank account.”
Some banks, such as FNB, offer no-fee transactional banking accounts for children.
As a parent, teaching children about money isn’t something that you ever stop doing. As they grow up their earning potential grows. They may graduate from doing household chores to getting a casual job. Typically, their expenses also increase. They may want to buy sporting equipment, a scooter or motorbike to get around or even save towards a car.
Perhaps the most important lesson of all is to remember that as a parent you’re a role model.
“If you’ve heard your child use a grown-up word or expression they didn’t learn in school, you’ll know they soak up everything around them. The same applies to how they learn about money. Remember that and the influence you have not just in terms of what you teach them but your own financial behaviour,” concludes Marlies.