Children as young as three years old can grasp financial concepts like saving and spending. This is according to Beth Kobliner, author of Get a Financial Life and member of the President’s Advisory Council on Financial Capability who spearheaded the creation of Money as You Grow, which offers age-appropriate money lessons for children.
A report by researchers at the University of Cambridge revealed that kids form their money habits by the time they are seven years old.
Here are a few suggestions to help you instil good financial behaviour in your children from an early age.
Set a good example
Children learn from example. They are more likely to do what you do than do what you say, so practice the same smart healthy financial habits you’re …show more content…
Explain needs vs wants
The first lesson kids must learn is that money has a set value, and when you spend this finite amount, it’s gone.
This is why the relationship between needs and wants is an important concept for children to grasp. They should know to spend their money on the important things first, then the luxuries or extras.
Start a conversation by asking your child of the consequences if you spent your entire salary on jewellery or shoes, leaving nothing for food or other bills. Explain that even though everyone really wants the luxuries, you have to pay for needs - like food and house - before you can buy items that are wants.
In their daily life, use practical examples to illustrate this point, such as a school lunch versus the latest game. They need to figure out for themselves what’s most important and how to prioritise.
Give them their own money to …show more content…
They should know exactly how much money they need to buy a toy, item of clothing, tech gadget or game, and how much of their allowance they will have to set aside every week or month to reach that goal.
Their own savings account, separate from their bank account, is a practical way to show them how much they have in savings and how interest works.
Clarify credit vs debit cards
A digital age means that children mostly see their parents swiping cards (not cash) to pay for purchases. They need to realise that using a debit card means that the money will deducted immediately from their account, including when they withdraw money at an ATM. They have to know exactly how much money they have in the bank before they shop.
With credit cards, children should understand that these cards are not free money – it only means that you can pay the money back later. Credit cards are valuable financial tools if used wisely and responsibly, especially to establish a good credit score.
Let them make
A report by researchers at the University of Cambridge revealed that kids form their money habits by the time they are seven years old.
Here are a few suggestions to help you instil good financial behaviour in your children from an early age.
Set a good example
Children learn from example. They are more likely to do what you do than do what you say, so practice the same smart healthy financial habits you’re …show more content…
Explain needs vs wants
The first lesson kids must learn is that money has a set value, and when you spend this finite amount, it’s gone.
This is why the relationship between needs and wants is an important concept for children to grasp. They should know to spend their money on the important things first, then the luxuries or extras.
Start a conversation by asking your child of the consequences if you spent your entire salary on jewellery or shoes, leaving nothing for food or other bills. Explain that even though everyone really wants the luxuries, you have to pay for needs - like food and house - before you can buy items that are wants.
In their daily life, use practical examples to illustrate this point, such as a school lunch versus the latest game. They need to figure out for themselves what’s most important and how to prioritise.
Give them their own money to …show more content…
They should know exactly how much money they need to buy a toy, item of clothing, tech gadget or game, and how much of their allowance they will have to set aside every week or month to reach that goal.
Their own savings account, separate from their bank account, is a practical way to show them how much they have in savings and how interest works.
Clarify credit vs debit cards
A digital age means that children mostly see their parents swiping cards (not cash) to pay for purchases. They need to realise that using a debit card means that the money will deducted immediately from their account, including when they withdraw money at an ATM. They have to know exactly how much money they have in the bank before they shop.
With credit cards, children should understand that these cards are not free money – it only means that you can pay the money back later. Credit cards are valuable financial tools if used wisely and responsibly, especially to establish a good credit score.
Let them make