Money, and managing it, is an essential part of one’s life. Parenting columnist Ouiam El Hassani shares her tips on how to teach children about money.
Money patterns observed in early life are a primary source driving financial decision-making in adulthood. As a child’s primary educator when it comes to money, it is important that parents teach a healthy relationship with finances.
By the age of seven, most children have grasped how to recognise the value of money and to count it. They also understand that money can be exchanged for goods, as well as what it means to earn money and what income is.
As we are living in a rapidly changing world, shaped by social media companies, influencers and sophisticated marketing campaigns that target young people, spending is much easier than saving. This is a daunting reality for parents worldwide who worry about their children falling into bad spending habits. However, there are a number of tips parents can use to educate their children about the value of money and foster a healthy relationship with money from an early age.
Here are Ouiam’s top tips on educating your child on the value of money:
- Teach children that money is only a tool
It is important to demonstrate to children that while money is important, it is a means to an end, not the end itself. For example, one person might have lots of hammers but never uses them for good. Another person might have one hammer but builds lots of great things to make themselves and others happy. The same with money. It is not about how much you have; it is about what you choose to do with it that is most important.
- Allow children to earn money
Allow children to earn pocket money by having to do chores, among other things. Help them come up with a list of potential money-earning jobs they can do on their own and in their own time.
- Talk about money in a positive way
It is so important to discuss money with children in an age-appropriate manner and not shun it as a taboo or uncomfortable topic. If children grow up thinking money is a difficult or awkward subject, this might result in them having feelings of guilt, shame or fear later in life when it comes to money matters, causing unnecessary anxiety.Children should also avoid hearing things such as “money doesn’t grow on trees” or “we can’t afford that”. If children grow up with the impression that money is bad, they are much less likely to ask questions, want to learn more or seek help when they need it.
- Distinguish between needs and wants
It is important for children to understand the difference between “wants” and “needs” because everything they desire might feel as if it is a “need”. Not only does this teach children to start thinking about the effects of delaying gratification, it also gives them the power to make choices regarding their purchases by considering the consequences
- Encourage them to be autonomous
Children crave autonomy and doing things “my way” from a very young age, so, the best way to teach them to have a positive relationship is to empower them to make their own decisions about money. Let children make mistakes. Maybe they’ll spend all their money on something silly, but do not bail them out and make sure they learn their own lesson!Giving them a steady allowance they can budget and save allows them to make decisions on a smaller scale in their childhood that can grow to become habits they have for life.
- Be a role model
In the formative years, children learn by watching things and people around them. Children may adopt the attitudes and behaviour that parents demonstrate at home. So, the starting point is to make sure you- the parent- are able to demonstrate a healthy and positive behaviour with your money and that your words and actions are in alignment.