Experts agree that the sooner children learn to manage their money, the better off they are as adults. Here are five tips to teach good money habits.
The earlier you start talking to your children about money, the more likely they are to develop good saving habits, says Stian de Witt, executive head of financial planning at NMG Benefits.
“Building a strong financial foundation from a young age is critical. Even legendary investor Warren Buffett credits the early money lessons his parents taught him with setting him up for success,” says De Witt.
It’s never too early to start
Talking openly about money matters with your children will build their financial awareness. Include your children in conversations about your monthly budget, income, and expenses from a young age. Show them how to prepare a budget. Ask them to calculate the tip on a restaurant bill. Get them involved in choosing the best grocery items based on cost and quality. “These may seem like trivial tasks, but they all help make a child financially savvy from an early age,” says De Witt.
Teach your children to budget
Help your children set up a simple age-appropriate budget – maybe one third for spending, one third for saving and one third for giving, for example. Or open a savings account for them and deposit a portion of their pocket money into it every month. “When they start to see their money grow, they will start understanding the value of saving, compound interest and budgeting,” says De Witt.
Set a good example
It’s not enough to simply teach your children about money: their biggest influence is the way you discuss and handle money around them. “Children learn by watching you. It’s no use teaching them to budget the one day and then going on a shopping spree the next. You’ve got to show them what good financial habits look like,” says De Witt.
For more about enjoying life’s luxuries on a budget
Help your children earn money
Don’t just give pocket money without asking them to do something for it. Get them to wash the car or mow the lawn. Older children can do casual jobs that will not only teach money lessons, it will also expose them to the workplace and how to follow instructions.
“Educating your children about money takes time – but it will instil good habits that will serve them well for the rest of their lives,” said De Witt.