What age should you start teaching your kids Money Matters?
Now! Irrespective of what lifestyle we have each chosen to live. What sort of housing. Work life balance we are content with, Money does matter. It provides choices. Circumstances change all the time sometimes due to decisions we make and sometimes those outside our control.
We need to start having positive conversations about money while they are young. This ensures they will adopt good saving habits and positive thoughts around money. Teaching your kids money matters early is very important for their future.
How often do you talk about money. Is it in a positive light with your partner. Normally it is the bills are overwhelming and there is not enough money! We have all been there at some point. How you handle these situations especially in front of your kids shapes their opinion and feeling towards money.
Teaching kids money matters can be in things you do every day like buying groceries, bills, fuel,I traveling currency conversions, rates of exchange and trusting reputable money exchanges.
Proud moments (had one yesterday) when I sent my daughter to buy the sausage sizzle and I may or may not have given ther too much so they had to give her change and work out how much that would be. (You have all done it I’m sure).
Pocket money guide by age group.
Under 5 years – pocket money $2.00 a week with a picture of what they are saving for (obviously this will change frequently at this age) and an excel column in $2.00 increments that they can colour each level as they get closer to their goal. As with any pocket money there must be chores – keep it simple, PJ’s under the pillow, shoes away, dirty clothes in wash, water veggie garden.
When their goal is reached make a big deal. Celebrate and congratulate them on reaching their goal and say how proud you are that they stuck it out and made it. It also helps to acknowledge along the way how frustrating it can be when you really want something but have to save the money. Explain how you also have to wait for the things you want too but it’s worth it.
Age 5-14 – There will be money they require for now (spending) and an amount that goes into a bank account that they should deposit. Explain the importance that they are saving for their future. (Chores: Make bed, dirty washing in basket, hang out washing, fold washing, put clean dishes away etc) Obviously this will change depending on how many kids you have, how suitable they are to handling breakables!
My daughter loves lists so I would put a list on her door so without me asking she would set about her morning routine and tick each item off and knew she had done well, felt good and I didn’t have to ask.
Show them the bank statement showing that the bank gave them some money for making good decisions and continuing to deposit money and not withdraw any. Explain the interest is earned on the amount you deposit in the bank, the more you deposit, the more interest you earn! Showing some excitement is important.
We spoke about family goals too, not necessarily in monetry terms but that we were working towards a goal and we would all celebrate when we reached it as it takes team effort.
15-18 – The bank account stays but now the pocket money becomes “living expenses allowance”. So I know some of you may be thinking I never got pocket money, let alone a bank account and now living expense allowance! But there is a method in my madness.
From when kids are born one of their first words is “more”, then not long after it seems they are always saying “I want I want” but rarely do we stop to explain how much or how long you had to work to earn the money to buy these things.
On top of that most of your hard earned income goes to rent, mortgage, food, utility bills, school fees and the list goes on.
Therefore by providing a living allowance and then deducting each week, rental, money for food, utilities, education costs and then what is left they get to keep. They will start to understand just how much “living” costs, where they can cut back what expenses can not be cut.
Each week the amount that is left is the money that they can “live” on, having fun with their friends, some weeks they will have left overs, others they will need to forego activities based on available funds.
This will help reduce stress on you and arguments about what you will and wont pay for them to do and whether you can afford it. Set ground rules and stick by them, both parties need to understand what each expense is, how much it costs, how often they are payable (ie. electricity every three months, they have to budget) The key here is understanding bills come up, some are expected, others not so much!
To show them that although you may give them $120.00 a week. Sounds amazing, but then deduct
$50.00 a week rent
$30 a week food (let them do a food shop for a week with the family budget and make a meal plan – they will get a shock at how much it costs and how much planning goes into it week after week)
Show them how to put a bit aside every week towards the
gas bill and so on.
When they want new shoes, clothes, phone etc It has to be saved for.
The amount is irrelevant but you have to be consistent.
Discuss how rent goes up in most cases annually. Therefore if they save for their own place provides security. If you want to go away on holidays involve them in the planning, tell them that they have a contribution to save for and you would love them to come.
Ask them for their top three must sees at your destination ensuring they feel a sense of achievement in reaching their goal.
Our eldest used to have to save her pocket money to contribute towards our overseas trips (of course no where near the cost but enough that she understood it cost a lot – but was worth it!).
We were always so proud of her reaching her target (which of course we made sure was realistic) but she was always so proud she made it! To this day she is an amazing saver and we are still so proud of her!
Discussions to have with your teenager.
What is hire purchase?
Administration Fees on using someone else’s money and why this is not a good idea.
Teach them if they want something bad enough they will wait while they save for it.
What happens when I buy something with a credit card, how much did it really cost me.
Personal Loans versus Saving for your first car.
Insurance what is it. Who needs insurance. How much does it cost?
What is a budget and why do I need one.
Save a portion of all your earnings to be put toward your future.
You may have to discuss ways they can make money, help them do up a resume, suggest jobs they would be good at, encourage good choices, have open discussion on lessons learned from bad ones.
Of course there are many other areas that will need discussing but the fact they know they can ask you and you will talk to them about it.
Both our girls know they can ask us anything, about money, investing – nothing is a silly question, we will explain it and what we think about it and why.
If we don’t know, we research it together. If you have a teenager that is not a ‘talker” leave literature lying around for them to pick up. Listen to podcasts while cooking dinner.
Teach your kids that you work hard for the things you have and you are grateful for them.
It’s never to early to be teaching your kids money matters.
Cake and Eat it 3