Practical ways to teach your kids to manage money

In the digital age, parents cannot afford to neglect the crucial responsibility of teaching their kids about managing money.

Ester Ochse, FNB wealth and investments product specialist, says whether it’s a billboard on the way to school, lifestyle images in a magazine or social media images of their favourite celebrity or idol – children can access information which may give them a misguided view of how money is “easily’”earned and how it should be used.

“Once a child has preconceived ideas of how money management supposedly works, it may be difficult for parents to entrench their preferred principles. Hence, it’s important to start the money conversation very early in a child’s life,” says Ms Ochse.

There are practical ways to help your children get to grips with managing money:

Household budget – whether it’s weekly or monthly, all families that earn income must ensure that every rand is dedicated accordingly. Get your children involved in this process and give them adequate responsibilities to make every rand go a long way.

Chores – start introducing educational exercises to help your kids appreciate that “money doesn’t grow on trees”. This could be small tasks where they get incentivised upon completion.

School trips – Schools often plan trips or learning excursions to places such as the local zoo or museum. While it’s the responsibility of the parents to plan for this financially, there’s no harm in allowing your kids to help in managing the savings kitty for this.

Family vacations – not every family may have the resources to go on a vacation now and then but where possible, parents can task their kids to manage holiday savings, especially if it’s a destination that kids are looking forward to visiting.

“Teaching kids about managing money needs to be a practical exercise instead of a conversation once in a while. This way, the awareness becomes a part of the child’s life and they start adopting the same principles in other areas of their lives,” advises Ms Ochse.

Ancley Jacobs, chief executive officer of FNB Cash Investments, says building a culture of saving is important. “With ongoing price increases, inflation and economic pressures consumers are left with a little less in their pockets at the end of every month. Saving money regularly will teach children the power of being able to buy bigger and more meaningful items after disciplined saving, such as a bicycle or games console, rather than many small items that quickly lose their appeal and value, such as unhealthy snacks or low-quality toys.”

Mr Jacobs suggest the following tips to help your children start saving from a young age:

The very first step in the process is to openly talk to your children about savings and investments and lead by example. Practice what you preach and demonstrate the importance and benefits of saving for the short, medium and long-term.

Help your children to start saving with a certain goal in mind which will be dependent on their age and life stage. Get your children to draw up a list of things that they want and need like a game, book, remote controlled car, gap year; and encourage them to start savings towards that goal.

Encourage your children to put their spare change or notes in a piggy bank or a wallet. This is one of the easiest ways to teach younger children to start saving.

To kick-start their savings you could match or contribute a percentage to your children’s monthly savings. This additional reward will give them a reason to save more and something to look forward to.

Today’s children and teens integrate social media and technology in their lives. Unlike previous generations they are exposed to the digital environment daily. So why not look at savings apps or gamification that will help them build on their savings journey.

Look for fun and innovative ways to help your children save. Use colour envelopes, jars, bottle caps and games which will help them understand the concept of savings.

“It’s never too late to help your children to start saving and investing, but the earlier you start saving the better in the long-term. This mindset will help your children become financially independent in the future,” says Mr Jacobs.