Talking to your kids about money can be a tricky conversation to have. It’s not just about understanding how money works but also learning about saving and why it’s so important. To help you kick off the discussion, consider the tips below.
When you want something and when you need something
It’s important to make sure children know the difference between wants and needs, as this factors into how adults make purchases. There’s probably been a time as a parent where you’re your child has begged and begged for something and you’ve had to say no because it didn’t factor into your budget that week. As an adult, you can discern that what your child wants is just that – a want, not a need – but your child sees it as a missed opportunity. Teaching kids there is a difference will ensure they make educated decisions about when is a good time to save those dollars and when exceptions can be made.
This is how we make money
As your kids don’t work, they don’t know that in order to make money, you have to work for it. Talk to them about what it means to have a job and work every day. Highlight how the money you earn from working allows you to not just pay for the essential items (the needs) but also the special exceptions (the wants).
It’s more than plastic
We’ve all heard the term ‘cashless society’, implying that most people pay by card these days. As a kid, it can be easy to misunderstand the value that bit of plastic (your very important debit or credit card) has. Next time you do the groceries and go to pay, consider explaining to your children what it actually means to be using your card in that instance. Educating kids about the care and responsibility required to use a debit or credit card is also a great way to ensure they properly understand the concept.
Where does all our money go?
Once your kids understand how you make money and how you physically pay for things, it’s also important that they understand what you do with your money. Next time you pay a bill, have your kids sit down with you and watch the process. They’ll start to develop a clearer understanding of wants and needs and also see the connection between work and the cost of things.
The most important thing – saving!
Teaching children about money can’t just be about the spending side of things. After all, educating your kids about saving allows them to understand how you have enough money to afford wants. Encouraging them to practice saving by putting any money they acquire into a piggy bank or a savings account you have opened for them is a great way to start.
Once your kids have a basic understanding of money and saving, you can start introducing fun ways of building on this knowledge. Tasking them with activities such as planning their own budget, or choosing how they’ll spend their pocket money each month are just a couple of ideas you could try.
General Advice Warning: This information is intended to be general in nature and is not personal financial advice. It does not take into account your objectives, financial situation or needs. Before acting on any information in this article, you should consider the appropriateness of the information provided. In particular, you should seek independent financial advice.