The money we spend each day tends to be invisible. When was the last time you withdrew your cash for the week and used it to make purchases? Rather than dealing in notes and coins, we tend to reach for our cards or shop seamlessly online. It’s entirely possible to spend money without even reaching for your wallet.
This can give kids some confusing messages about how money is spent. The danger here is that they won’t develop financial literacy and will struggle to manage their own money later on. One way to help them to build their financial management skills is to choose moments to talk to them about money and why you’re making certain decisions.
These moments could include:
Shopping at the supermarket - If you’re taking your kids on the weekly shop, get them involved in the process. Involve them in drawing up your shopping list and talk through your budget. Have them help you to find items, and weigh up differently-priced options. As a bonus, helping them to understand how a food budget works might just cut down on all those requests for treats!
Withdrawing money from the ATM - Getting out money does seem a little magical. So it’s important that kids can make the connection between the money you go to work for, and what they see coming out of the wall. Talk to them about where the money you’re withdrawing will go and help to understand the importance of knowing what’s in your bank account.
Letting them make choices - When it comes to pocket money or money from a birthday or Christmas, it can be helpful to let your children experience the consequences of their financial decisions. It’s tempting to tell them what to do with their money, but once they discover that they can only spend their precious cash once, take the time to talk with them about what they are feeling and how they might use their money differently in the future.
Choosing activities - When you choose what to do as a family, don’t forget to talk through the costs of different options. Kids will appreciate balancing an expensive trip to the movies with a free picnic in the park or will be amazed when they compare the cost of an icecream at a shop versus a whole tub at the supermarket. Encourage them to brainstorm and research low-cost ideas and get creative!
Working for their money - Creating a list of simple weekly chores and allocating a set amount of pocket money per job is a fantastic way of teaching kids about how money is earned and why parents have to go to work in the first place. If each chore is worth $1 and your child does five chores they will have $5 to the spend on something of their choice. If one week they only do three chores, they will have less money. It is a valuable lesson for children to learn that money really doesn't grow on trees...
Teaching the importance of saving - When kids have earned their pocket money for the week, you can also teach them the importance of saving. Is there something - a toy, an activity etc, that they would really like? Set up a goal sheet, show them how much they need to save to pay for what they want. They can record their progress. Each week they can choose how much of their pocket money they would like to save and how much they would like to spend. As they get closer to their goal, they may even decide to keep saving rather than spending what they have put away.