The foundation for smart money habits can be put in place at an early age and it’s important to teach children how to adopt good financial practices for the rest of their lives. To begin to explain to kids where money comes from, consider these important money lessons to help them learn how to save and manage money.
When kids are asking for the latest video game or bike, it pays to teach them the value of money from a young age and guide them in figuring out a ‘want’ versus a ‘need’. Food is a need, but that video game is a ‘want’. Help them appreciate the value of saving money for the things they want, consider an allowance to let them get a taste for earning money and putting it towards these things, take them with you to the ATM to see where earned money is stored and bring them with you to the supermarket to understand just how much the food shopping costs.
Budgeting can teach kids how to spend wisely and also ensures they put aside money towards their future goals i.e. their ‘wants’. Even though they won’t have much by way of income or expenses, it’s always good practice to show them where their money ends up. If they spend too much and have nothing left, that is an important lesson about what happens when they overspend. You can even show them your own budget and how you spend your money and put the remainder aside.
Once a budget is in place, help them set a goal and then develop a plan to reach that goal with the money that remains. Let them create a wish list that shows what they want to save for, then sit down with them and help them plan just how long it might take to save up enough money to buy those items on the wish list. They’ll thank you for it in the long run.
Make saving fun by encouraging them to plan for something that is of high value, rather than jumping in - they will enjoy it when it comes time to spend! It’s also important for kids to understand that having a financial cushion, or emergency savings, is as good a goal as any material object. One way to support them is by matching the money they save into their account. Another is to split their savings into short and long-term goals to help them understand that the point of saving isn’t just to put money towards immediate desires.
By giving kids pocket money for doing regular chores around the house, they learn that if they work hard they’ll be rewarded for it! Kids will understand that money has to be earned and they will see how a household works. You can offer additional money for out-of-the-ordinary tasks so they can better understand the concept of working for pay and going above and beyond to save for their goals. Tread carefully because you don’t want them hitting you up for every task they do around the house.
If you help kids learn these lessons on a small scale from the outset, they’ll not only develop the methods and money skills to lead a more financially secure life, but also recognise how to live within their means.
If you’d like to talk to us about your finances, call us on 1300 747 747 or visit qantascu.com.au.
The information in this article is of a general nature and does not constitute advice in relation to any investment or purchase. It has been produced without taking into consideration your personal financial circumstances, objectives or needs. Prior to making any decision you should conduct your own investigation and analysis of any benefits or costs associated with such. You should seek your own independent legal and financial advice. You should also read the Product Disclosure Statement (PDS) available on our website before applying for financial products and services. Qantas Staff Credit Union Limited trading as Qantas Credit Union ABN 53 087 650 557, AFSL/Australian Credit License 238305.