Teaching children about money can be a challenge, especially if you are pressed for time. So how do you pass on good financial values early on, no matter what? Clinical child psychologist Emma Spencer shares her advice, which was recently shared in the FPA Money and Life E-Book, which can be found here
1. Talk about where money comes from and how you earn it. At age three to five, children are mentally developed enough to start learning what money is for, where it comes from and why we need it. Explain the relationship between adults going to work and being able to buy things for the family.
2. Explain the difference between needs and wants. We live in a society where every new product is heavily marketed, creating temptation. It’s up to you to teach your children what is a necessity and what is a luxury—and to explain that even basic necessities need to be paid for.
3. Don’t mollycoddle your kids. You can’t shield them from reality and then expect them to go out and become resilient humans. If they run out of pocket money before the end of school holidays, don’t give them more. Children need to be taught how to become independent. That won’t happen unless they learn to take responsibility for themselves.
4. Show good financial practices. When I go to the supermarket, I put my youngest in the shopping trolley and ask him to hold the money I will pay with. Include your kids in tangible money activities because children learn by observing and imitating adults.
5. As early as four or five, explain financial concepts to help kids learn basic life skills. For example, let them sit down with you and watch you pay bills — in paper or online — and show them the family budget. If you’re out shopping and you need to make a choice between two items, talk to your child about which one you are choosing and why.
Money talk is easier when it’s about everyday things!
If you’d like to speak with Geoff or Tristan regarding any of the above, please get in touch!