Credit cards, ATMs and EFTPOS have made our lives easier in one respect, but spare a thought for the challenge our cashless culture poses to parents. Teaching children the value of money today requires care, persistence and setting a good example.
It all starts from when a child first begins to count. Teach them about the different currency denominations and explain how everything has a price, from the gingerbread man in the bakery to the latest toy.
Teach them how to count their money to see if they have enough to make the purchase. It’s also important to talk to them about ‘needs’ and ‘wants’. Use shopping trips as an opportunity to teach them that everything in a shop costs money and so we must decide what is really needed and what isn’t.
To show that money is a reward for effort, pay pocket money in exchange for children helping around the house.
On ‘pay day’, provide pocket money in denominations that encourage children to save a portion. For example, if a child has earned $5, give them five $1 coins so they can save $1.
Start the saving habit early by opening a savings account for your child and encourage them to make deposits and watch the balance grow and earn interest.
If children are keen on a big ticket item, such as an iPod touch or Nintendo DS, encourage them to save up for it. Show them that by saving a fixed amount of pocket money each week for a certain period, they will have enough to fund their purchase. Once they reach the goal, make a special outing of going to the shop to buy the item.
It’s also important to give them some autonomy to make their own spending decisions so they learn through experience.
If they want to spend all their pocket money at once, explain that this means they won’t have any money until the next pay day to buy anything else they might like.
By educating our children and encouraging them to learn through action, they can grow up with the necessary skills to manage their money.