How To Teach Kids Essential Money Lessons
Today is Universal Children’s Day. To commemorate this day, personal finance website JustMoney quizzed some kids about what money means to them. They found that many children recognise the importance of money, and the value of saving as a means to fulfil their dreams.
JustMoney asked the children four financial questions to measure their understanding of the subject.
To hear more of what the children had to say, watch this video.
What is money?
Almost all of the children understood that we money is essential to buy the things we want or need. As 5-year old Imaad and 4-year old Mikail said, we need money to buy food, drinks, and of course ice cream, suckers, pillows and toys. Others such as ten-year-old Anru and 9-year old Racheal understand that money is used to buy a house, pay your bills and take care of your children.
Why is money important?
Data, transport, fruit, school fees, water, and snacks were some of the items that the kids mentioned. “You use money to get something that you need or you’ll probably need in the future, like a house,” says Ruvarashe, a 9-year old. She says money is also used to buy a car.
“Money is important because you use it to pay your school fees, buy food, water, and other important stuff,” says Mihle, another 9-year old.
What is saving?
According to 12-year old Shasmeen, saving means putting money aside in a deposit account or investment fund. For 7-year old Jordan, it means putting it in a piggy bank.
Why is it important to save?
Racheal understands that saving will keep her from borrowing. “I can just take out my own money and buy what I want,” she says. According to Kauthar, a 9-year old, if you save you might have a lot of money to buy nice things. “Saving is important so you can do something big that you always wanted to do,” says Mkhanyisi, an 11-year old. “If you don’t save, you’ll never have enough money to get the things that you want,” says Anru.
The earlier the better to instil a savings culture
According to Sarah Nicholson, commercial manager at JustMoney, talking to your kids about money is vital. It gives you the opportunity to instil good money habits and a healthy savings culture in your children from a young age. “This could mean the difference between them growing up to be financially responsible, secure individuals, or individuals who are unable to manage their cost of living,” says Sarah.
Hints and tips for parents
Teaching your children about money can seem intimidating, but you may already be well on your way without even knowing it.
Start young – the traditional approach is to buy your toddler a money box, so they can see how their money can be saved and how it can grow over time.
Use everyday events – your shopping trips, your bill payments, games and books to bring financial concepts to life in a fun and practical way.
Set the example – show your children what it means to be financially responsible by paying your bills on time, setting aside emergency funds, and saving up for special treats.
Teach your children about budgeting – help them set goals for the things that they want and tick off financial milestones on the way. If you give your children spending money, or compensate them for chores, this could be deposited into their account and could be saved towards their goals.
Let them save for a major purchase – this will help them to become accustomed to delayed gratification, also helping them understand the difference between needs and wants.