Financial literacy for children is a hot topic. Start them young so they learn to save not spend, is one school of thought. But what if as a parent, you are struggling with your own financial literacy, can you be a positive role model?
Children and money is always a very interesting topic of conversation.
The question of what to teach children about money and when to start is something we are asked quite frequently.
I really like Rob Stocks article Cents and Financial Sensibility , his 10 point checklist, while somewhat tongue in cheek, does have a few gems in it.
Teaching your children financial literacy should go hand in hand with their understanding of maths. There is no point trying to teach the value of $20 or what you can buy with it if the child can only count to 10.
Give them a piggy bank and pay pocket money in coins. This way they can clearly how it can be divided up. A portion goes into the piggy bank and is saved to buy the latest toy or gizmo, perhaps some to donate and the balance they can spend now.
Let them make mistakes. If they blow their pocket money in the first couple of days on lollies, so be it, there isn’t any more until next week.
Helping your child become financially literate requires quite a lot of discipline on your part as a parent.
The other key problem is that many parents aren’t financially literate themselves and are struggling to manage their own money, let alone trying to teach their children to manage their pocket money.
So for both parents and their children, it’s all about going back to basics. Look at the concepts that were around well before we all had credit cards, EFTPOS and internet banking.
If you spend more than you earn, you end up in debt. If you spend less, you have something for a rainy day.
While these are seemingly simple concepts, implementing them are not that straightforward because we are surrounded by enticements to spend now, pay later – and the voice in our head is agreeing!
It doesn’t matter what age we are and what we have been taught about money by our parents, the urge for instant gratification seems to override logic more often than not.
The answer is Yes!
It is important to teach children about money. And it’s also important to teach them how to kick a ball, bake a cake and have fun being a kid. You may be surprised what you learn about your own financial behaviour along the way.
Hope these points help you navigate the decision process around pocket money.
We would love to hear your own stories about teaching your children about money, so post a comment and share with a friend.