Teach kids value of money
We live in a society in which the majority of people struggle to manage their finances because of a lack of knowledge, ultimately resulting in their getting caught up in massive debt.
Gareth Leonard, wealth manager at Netto Financial Services, said: “Education about the value of money ties in with the old saying that money doesn’t grow on trees. Unfortunately, a culture of instant gratification has developed. People want what they want when they want it and this has led to a significant increase in household debt.” Leonard said the value of money is a concept that should be taught from childhood.
Experts pointed out ways to teach your child about money:
- Set an example yourself.
There’s a wise saying that goes: “Children seldom listen but never fail to imitate.”
- Encourage your child to give money to the poor, regardless of how small the amount.
- Once the child is old enough, let him/her work for a family member or friend, doing odd jobs in a business during the holidays. If you can, take your child to work and let him or her do your filing or another simple task for a small compensation.
- Encourage children to give their old clothes or toys to charity. A good habit to teach them is to give away something old each time they get something new.
- In the holidays and at weekends get your children involved in voluntary work such as helping a younger child with his or her homework. Children could do voluntary work in the community, such as helping out at the local hospital or old-age home. By doing this you will teach the child about giving back to society.
- Encourage your children not to buy on credit.
- Get older children to pay back their student loans (or part of them) by working part-time. If they pay for their studies themselves, they will take their education more seriously and work harder.
- Get your child to participate in events such as KTV Market Day, which teaches children about entrepreneurship.
- Give your children a small allowance. Explain that, thereafter, if they want something that is more than their allowance covers, they can do odd jobs around the house to earn extra money.
- Encourage young children to play “shop” by giving them play money and items to trade.
- Allow your children to play games, such as Monopoly, that will teach them about buying property.
- Open a bank account for your children from babyhood. As they grow up, have them bank a portion of whatever money they have, encouraging them to save from early on.
- Explain to your children that they cannot have something just because their friends have it.
- Don’t buy your child lots of presents at birthdays and Christmas. Expectations are set when children get used to receiving excessive gifts. It should be emphasised that it is the thought of the gift that counts and not the monetary value.
Melony Jacoby, a certified financial planner, said children can be taught to value money by starting to save from an early age. “My daughter saves 10% a month of her pocket money into a unit trust off her own bank account and tithes 10% to the local church. She understands that she needs to make sure there are funds available in her bank account to allow for these debit orders, otherwise she pays bank charges on returned debit orders. She is 14 years old and has been tithing since she was about nine and saving since she was 12,” she said.
Leonard said: “One of the best ways to educate children about the value of money is to reward them for work done. Typically, this is around the house and is determined by the age of the child and what they can complete. During my childhood, and particularly in school holidays, I had the option of washing cars or helping around the house or in the garden and receiving compensation for this. The importance is that the money was not just handed over, but earned. By working and earning money, children can place a value on the money earned.”
Said Jacoby: “It is important, because not only are you assisting the next generation to create wealth, but can you imagine how it could positively change our economy? By not teaching children, parents create a problem for society. Some children grow up wanting nothing, lacking nothing, having excess, never knowing what it is like to be challenged.”
She said parents are often their own worst enemies. “I hear parents saying: ‘All my child does is want everything they see’, or ‘My children are spoilt brats’, or ‘They don’t appreciate anything’. Well, sadly, with no judgment, parents are to blame. It is okay to say no to your children; by doing so you are actually teaching them to problem-solve, to know what a challenge is. But, most importantly, you are teaching them respect, not only for you, but for the value of money.”
Leonard said there is no right or wrong answer for when you should begin. “However, it should be at an appropriate age when the child begins to grasp a numerical understanding.”
“When a child looks at you and says, ‘I want that —.’, he or she is old enough to understand an answer like ‘No, we cannot afford it’, or ‘No, let’s wait till your birthday’ or ‘Let’s use your pocket money to buy it’,” said Jacoby.
“A novel way of creating a savings culture is to explain to your children that any part of their pocket money they save, you will be willing to match provided they don’t spend the money for a certain period—possibly a year. This encourages saving from an early age and illustrates the choice and consequence of spending money now or delaying [for a reward].”