Ask any child what they want to be when they grow up and you will hear things like; “I want to be a doctor”, “I want to be a pilot”, “I want to travel the world” or “I want to save the whales”, but dreams cost money and if dreams cost money why are we teaching our children to live the life of their means and not live the life of their dreams?
Financial freedom starts with financial education!
Here are simple ways from Money Savvy to teach your kids the value of money and the importance of saving.
Saving for BIG things
Kids these days always want the coolest and newest gadget, toy or piece of clothing that are trending. This means that parents tend to be the ones who are stuck with the bill on a weekly basis. Parents can change this by simply switching from giving hand-outs to giving hand-ups. Teaching your eight-year-old to save for big things that matter to them is a great way to make them understand the importance of delayed gratification. Talking to them and ascertaining what it is they want and the sensible reasons behind their choice before encouraging them to save up for it themselves is the best way for them to engage with the concept of saving and its foundations.
Having their goal of saving for that specific item written down makes it more concrete for them and you. And keeping track of their weekly savings allows them to physically see how far they have come in achieving their goal. Parents can make it a tad more interesting by adding R10 for every R50 they have saved up until they reach their goal. It is also important to note that the time frame of the goal itself is important. Young children tend to have a shorter patience clock compared to older children who have already reaped the rewards of previous savings goals. The recommended time frame is 3-6 weeks for kids below the age of 7 and between 3 and 6 months for kids older than 8.
Get them on a budget
There will always be that one thing, place or person that constantly causes you to make poor spending choices. Well, that ‘list’ also applies to your kids. The tuckshop in school and friends are the top two main reasons why your little one repeatedly ask for spending money each week. Getting your twelve-year old to realise how recklessly they are spending each weekend because of the pressure to keep up with friends is of critical importance to their future spending habits.
Simply setting a budget for their tuckshop and constant weekend excursions can have them changing their spending patterns for the better. Having to spend their own cash and knowing that it is for the whole month will have them thinking smarter about where, when and how much they need to spend their money so it can stretch far enough to reach the next time they are due to get their allowance. They will reach a point where they find themselves ‘living’ on a very tight budget and must cut back on spending. This is the point where they will learn the true value of money and the skill it takes to balance it with their wants and needs in later life.
Mindful financial choices
Making mindful financial choices around your kids allows them to respect money and what it can do when handled with responsibility. Setting the best example possible when it comes to your own bank balance will influence your kids to not only save money so they can enjoy the big and small things in life, but also provide them with the foundation to get themselves out of tight financial situations and lead money savvy lives going forward.
Did you know that 70% of income-earning South African’s are over indebted? This means they are living on debt to make it through each month. This is due to lack of financial education and having bad financial habits and behaviours.
Financial education can make a difference, says Kathryn Main, Managing Director of Money Savvy . “It can empower and equip young people with the knowledge, skills and confidence to take charge of their lives and build a more secure future for themselves and their families.
Money Savvy is revolutionising the way financial knowledge is disseminated to younger generations of South Africans. It is questioning the traditional schooling system, which currently produces more followers than leaders. It instils within children – from a very young age – the problem-solving and critical thinking skills they need to make financial decisions now and, in the future, using the analytical skills they learn through the program.
Download the free E-Book “How to Raise Money Savvy Kids” by clicking here.