Global Money Week (GMW), is an annual financial awareness campaign built to inspire children and young people to learn about money matters, livelihoods and entrepreneurship. It’s inspired us to put together our top 5 tips on how you can teach your own children to be financial savvy,
Our kids are are greatest asset (and often our biggest liability mentally and emotionally!) but while we can tend to obsess over developmental milestones and formalised learning, it’s worth considering the things that you can teach them that they are unlikely to learn in a traditional schooling environment. These are important lifeskills that could make a huge difference to their lives when it’s all said and done.
1. It’s never too early
Teaching kids about money from an early age gives them the best chance to set themselves up for success. It’s an easy one to teach, since most of us these days are well versed in the language of some kind of debt, including our mortgages.
It’s important to teach your children about the myth of instant gratification, which is rare in the real world. By explaining how money works, and that most things cost money, you can help them to understand value – which brings us to our next tip…
2. Distinguish Between Wants and Needs
We need food. We need a roof over our head. To achieve these things, we need to work for money. Your kids may want toys and games on a daily basis, but they definitely don’t need them.
Teach your kids to take care of needs first, and they will be more likely to have money to pay for their wants.
3. One dollar saved can quickly become two dollars
If your child begins to save just a small amount every year, by the time he or she reaches age 65, those savings will have multiplied to reach a significant amount more. If your child waits until they are age 35 to start saving a similar amount annually, he or she will only have significantly less.
But rather than focusing on the end amount, we like to teach the concept of saving from a young age by getting our child involved in the hands on mechanics of putting money into the money box or jar and then taking it to the bank. The more you do this, the more it is likely to become a habit and something your child will know how to do independently of you before you know it!!
4. Money Does Not Grow on Trees
Unless they are in line to benefit from a trust fund or a big inheritance, your kids are most certainly going to have to go to work for their money. It doesn’t hurt to introduce this concept nice and early by incentivising weekly or daily chores with pocket money. While earning money is great, the next step is to equip them with the tools on deciding what to do with the money.
We recommend encouraging them to split their kitty into three seperate savings accounts/or money boxes – 1. Save, 2. Spend, 3. Donate. This also teaches them that money is something that can be used to effect incredible change if used in the right way, as well as opening their eyes up to just how lucky they are.
5. Money Cannot Buy Happiness (or Friends)
Of course we all know that the best things in life are free. Watching a sunset with our loved ones, the smell of freshly cut grass, those silly special moments with our kids that we’ll fight to remember forever. When you stop and think about it, it’s often the small things that make us happy – even though we can sometimes get off message with that ourselves.
Instilling our kids with a strong sense of self that is not attached to fashion or frivolity gives them a good foundation for understanding this. Also understanding that, in today’s social media crazed world, that comparisons must be made with a rather large grain of salt, and that staying in your own lane, following your own dreams is all that truly matters. You may like to keep some of your own case studies or examples up your sleeve to illustrate exactly how this works in real life, depending on what you are comfortable with.
Lastly, we urge you to keep in mind that kids learn the most from watching and modelling the behaviour of those closest to them – YOU! So if you’re really serious about teaching them good financial habits, you need to take a good look at your own relationship with money first and foremost. The more exposure they have to financial information and scenarios, regardless of how minor they might seem, the more they will learn. It’s up to you to provide them with these tools to give them the best chance of achieving their own financial freedom in the years to come.
For more information about Global Money Week along with resources and tool kits, visit https://www.globalmoneyweek.org.
*All lending subject to status and lenders criteria. Terms & conditions apply. This document contains general information only. Your own personal circumstances have not been considered and you should seek independent financial advice prior to making any decision on a financial product.