Your kids learn a lot about money by observing your financial habits. If you’re responsible, chances are they will be too.
Drum asks experts for advice on how to teach children about money at different stages of their lives.
Preschool kids
Children can be taught about money from as young as the age of four, says Casey Rousseau of 1st for Women.
Unfortunately, it’s not that easy to teach little kids the value of money when paying with plastic cards, so let your child hand cash to the cashier at the supermarket – it shows that money is exchanged for goods. It also teaches them that you’re left with less money each time you buy something.
Introduce young children to the world of finance by giving them a piggy bank in which to save their cash. Once a week, count the money with them so they can see how the number of coins increases.
Talk about money. Discuss financial matters, such as saving for a holiday, with your partner in front of your child. It will teach them that money management is a life-long process.
Read more | 9 ways to help your child develop a healthy relationship with money
Primary school children
Giving your kids pocket money is a good way to teach them about finances, says Ronald King of PSG Wealth. Decide when, how much and how often they get “paid” and start with a small amount.
Children should pay for their own recreational activities from their pocket money, for example movie tickets or a longed-for toy. Specify beforehand which expenses you’ll make an exception for if they ask for more cash. Stick to the rules and your kids will learn their pocket money has to last until the next “pay day”.
It’s important they learn money isn’t just handed out and the more they work for it, the more they’ll get. Reward them with extra pocket money for chores they don’t usually do, such as washing your car.
Open a savings account in their name and chat to them about what portion of their allowance or birthday money they need to save in order to buy a specific item. You can help them work out how long they need to save before buying the item.
High school kids
Involve them in the household finances, says Danelle van Heerde of Sanlam. Chat to them about your budget and expenses – they need to know parents don’t have boundless resources.
If money is tight, ask them to help come up with solutions. For example, for their birthday they can either have a party or get the gift they really want, but not both.
Help them manage their allowance and understand it’s a limited supply. Discuss the amount of pocket money they’re entitled to, what they need to use it for, and what their financial responsibilities are.
Draw up a monthly budget together and show them how to distinguish between necessities, such as toiletries, data and airtime, and luxuries, such as entertainment.
Encourage them to save for a goal, such as a new cellphone. Add incentives by offering to pay half if they are able to save the other half.
At the end of each month, go through what they’ve spent their money on to show how even small amounts add up.
If they have a bank card, teach them about transacting safely online and what not to do – for example, divulging their card details or lending their card to someone else.
Read more | Should I give my kids an allowance?
Tertiary level students
The golden rule of good money management is simple – don’t spend more than you earn, says Tamryn Lamb of Allan Gray.
Your student child’s earnings could be an allowance from you, or income from a part-time job or a student loan. They need to learn to make their money last and not get into unnecessary debt.
Another good lesson to learn at this stage is investment. If there’s spare cash, consider basic unit trusts or tax-free savings plans as a starting point. Many investment firms have fairly affordable minimum investment amounts that make investing more accessible to students. Teach them it’s never too early to start saving.
Don’t forbid your children from spending the money they save. This can discourage them from saving.
Rather teach them to do their homework about what they want to buy, such as comparing prices between shops.
