With the end of the financial year almost here, now is the perfect time to talk to your kids about money. Specifically, how you can prepare them to make good financial decisions not only now, but in the future. Here are five money skills worth teaching the kids.
How to save
Banking has certainly progressed beyond the piggy bank, but don’t underestimate the power of this age-old approach. Buying your kids a piggy bank of their choice will get them excited about saving, and they’ll love opening it every once in a while to see how their stash is growing. For older kids, they may prefer an online option like ZAAP that gives them the power to manage their money with their own card.
How to budget
It’s one of those money skills many adults don’t even know, but one that your kids can only benefit from. Even if they don’t have a steady stream of income, teaching your kids how to budget their money will make them more conscious of their spending, and more aware of their means (they may be less likely to buy that $8 toy if they only have $12 in their account). While you probably won’t find a ‘one size fits all’ budget for your kids, the Barefoot Investor’s blow (spending money), mojo (safety money) and grow (long-term wealth) approach works well.
How to work for their money
By now, your kids know what to do when they receive money – but how do they go about actually getting it? Foster their entrepreneurial spirit from a young age by suggesting things that they could do around the house or your neighbourhood to earn money. In return, support their ideas and motivate them when their inspiration runs low. One of the biggest lessons they can learn early on is that working won’t always be fun, but it is always worth it.
How to negotiate
Negotiation comes naturally to some, but for others, it’s often shied away from. There is a difference between trying to rip someone off, and ensuring you don’t get ripped off yourself, and teaching your kids to navigate that fine line is an invaluable skill. Provide them with opportunities to negotiate their pocket money (“Can you tell me three good reasons why I should pay you extra pocket money this week?”) and watch them sail through salary negotiations, car purchases and business transactions in their adult years.
How to spend wisely
Perhaps the most important habit you can teach your kids from a young age is how to spend their money wisely – it is all about creating a mindset that they will carry with them through life! Teaching them about ‘needs’ vs. ‘wants’ is key here, and you can explain the difference as you go about your own transactions from day to day (e.g., “I want to buy a new pair of shoes, but first we need to replace our broken vacuum cleaner”).