Mobile and card payments are fast becoming the only way to pay. Research commissioned by The Royal Australian Mint has found that 67 per cent of parents worry that the switch to mobile and card payments will affect a child’s ability to understand the value of money.
In a world where cashless technology is on the rise, how do we help kids build a connection to money? Aunties, uncles, grandparents and friends hand out gold coins, or notes for birthday treats. The kids run off and add these gifts to their piggy bank. But, what else can we do?
We’ve highlighted some simple ideas to help teach kids about money. Regardless of whether you’re a parent or not, you can positively impact the financial lives of the kids in your life.
Start saving with three jars
A popular idea is to create three jars, one for spending, one for saving and one for sharing. A piggy bank is a fun way to create physical contact with money. Take this one step further and implement the three jar concept and teach them to manage money to spend, save and share.
Open a bank account
Once they’ve saved some money, you might like to open a bank account. By helping them deposit their money into their own account they’ll gain a better understanding of how money works. As they watch their money grow they’ll be motivated to continue saving.
Provide a good example
What are the kids learning from you? Your actions will help them learn self-discipline when it comes to spending. Showing them how to prioritise ‘needs’ versus ‘wants’ will help them make wise choices when it comes to spending their own money.
Help them set goals
A great way to illustrate the concepts of time and money is to track their efforts on a timeline. Let’s say your child wants to save for a new Lego set. Grab a large piece of paper and record each time money goes into their savings account from $0 to the goal amount. Keep this in a prominent place, such as on the fridge door. This is a fun way for them to see how much they’ve saved and how far they’ve got to go to reach their goal.
Introduce pocket money
You can get your kids thinking about where money comes from by rewarding them for small jobs they would not usually do. Do the leaves need raking? Can they help wash the car? Occasionally you’ll still see the old ‘lemonade stand’ make an appearance in your street. Does your child have an entrepreneurial spirit? What ideas do they have that you could encourage?
As kids reach late-primary school age, paying pocket money digitally can also help show them how to keep track of where each dollar goes. You can help keep track of finances together and talk to them about carefully planning and saving for any future buys. Also discuss ideas like opportunity cost. Help them understand they cannot automatically get everything they want, there is often a trade-off. It will also help them understand the concept that digital money is still hard-earned money, and in order to stay ahead financially, you need to be spending less than what you earn.
Educating kids about money is about building money awareness into everyday situations. Opportunities to talk about money are everywhere. At the petrol station you can talk about the highs and lows in the petrol prices and the importance of planning when purchasing and comparing prices. Or if your kid loves mangoes, you could discuss how they're expensive when they are out of season, and perhaps explain why it may be cheaper to buy them from the markets than the corner store.
The value of a great financial understanding early in life is priceless.
Need help with your finances?
Navigating the world of finance can be overwhelming even for an adult. With some smart planning and a good strategy, you can get your finances under control. If you’d like some help, TelstraSuper Financial Planning can provide advice covering a range of topics. You can get tailored financial advice from TelstraSuper Financial Planning via phone or video conference without compromising on service. Call us on 1300 033 166.