AGES 3-7
- Show children the value of money by explaining what $2 can and can't buy during a shopping trip.
- Let them watch you pay for things or even get them to pay for some things at the counter.
- Do not give children notes. Pay their pocket money in coins as they need to understand how to allocate their money.
- Show them how to visualise their goals. Get them to draw or write what they want to save for. Keep the goals realistic and short-term, otherwise they will lose interest very quickly.
Lessons learnt:
- Different things have different values.
- Money simply doesn't grow on trees and that you have to work for your money.
- You have to allocate your money for different things.
AGES 8-12
- Encourage them to participate in a school banking programme, or simply start your own with one of the great kids savings programmes available. This will give them a sense of regular commitment to savings.
- Get them interested in looking at their bank statements and following how much money they are saving. This will get them used to reading banking paperwork.
- Get your kids to start thinking of a medium- or long-term saving goal and work out how long it will take them to reach it.
- Give them a combination of notes and coins for their pocket money. This will really strengthen their allocation abilities and their efficient use of spare change.
- Start showing them the family bills and explain positively that they have to be paid to keep the household going.
Lessons learnt:
- Saving is a planned activity and something that needs a bit of thought rather than just putting away what's left over.
- The value of small change.
- It takes a fair bit of money and good money management skills to keep a roof over their heads.
TEENAGERS
- Encourage them to set up their own bank account and use Internet banking. Direct debit their pocket money into their account. This will get them used to dealing with intangible payments, and that electronic money is not just a set of numbers.
- Make them responsible for their own bills such as mobile phones. It is a quick way to teach them how to spend wisely.
- Try not to lend money to children for purchases that are of an extravagant nature. If they really want it, encourage them to get a part-time job. If you do loan money to them, do so only on the grounds that you will reduce their allowances until the loan is paid.
- Introduce them to the concept of return on investment. Show them the value of putting some of their money into high interest savings accounts or even into managed investments.
- Highlight the fact that if they start now, they will be so much better off down the track.
Lessons learnt:
- Not only will they learn more modern and more efficient banking techniques, they will also learn how to curb their wants, or find ways to earn, rather than going into debt for something that is not totally necessary.
- It takes money to create money.
This article was first published in The Sunday Times.
