Each new generation will treat money differently to the last, but children of the 21st Century certainly have many more uses for money than those of the last century. Not all that long ago a bike or a doll was a 5-year-old’s dream gift; now it’s an iPad!
Attitudes and activities are changing much earlier than in previous generations, so, for the sake of their future well-being, it’s important to introduce your children to the intricacies of money management from an early age.
Keep it simple – explain where your money comes from and how it is spent. Remember, children learn best from experience so they will probably follow your own example.
Some helpful hints include:
- Set up a bank account in the child’s name and explain that if they want to buy something, they must first have the money.
- Encourage them to do jobs to earn their pocket money. This also teaches them responsibility (which is handy when they start talking about their rights!).
- Help them understand that the money that comes “out of the wall” was first put in there through your work.
- Inspire your child to save a fixed amount, say 10%, from their pocket money for more expensive items (like their first iPad).
As they get a bit older:
- Explain how unnecessary spending as a result of peer pressure will impact on their future.
- Explain how credit cards work and teach them what happens when the full balance isn’t paid off every month. This is a great lesson in how debt quickly gets out of control.
- When you buy their mobile phone let them pay for the plan or any excess calls over the monthly prepaid limit from their own money.
- Allow kids to make their own spending decisions so they learn from their mistakes.
Teaching the basic money facts to your children when they are young will go a long way to setting them on the right path to financial success in later life.