Ohmyhome co-founders Rhonda and Race Wong learned the value of money at an early age, mainly from their parents. “They were very conscientious about their spending,” Race shared, “and taught us to be the same by counting the costs of things we wanted to buy.”
Children, no matter how much noise or mess they make, are intelligent creatures. You hold the special responsibility of modelling good values for them to follow, because they will mimic whatever they see or hear from you, and valuing money is one of the most important things they’ll have to learn sooner or later. So might as well start them young.
Here are 5 ways you can teach your child the value of money.
1. Teach them the difference between needs and wants
This can help reduce impulse buying and accumulating material goods for temporary gratification. For instance, you can go back to basics and ask them, “Do you need this right now?” or “What would happen if you do not buy this?”, whenever they point to something they want you to buy for them.
Looking at the bigger picture, it’s a good exercise for adults too, to go over what needs are versus what wants are. Talking to your child and asking them to point out which things in the house are needs or wants will help to re-emphasise this.
2. Give them a weekly allowance to teach daily budgeting
The art of budgeting — there are many ways you can teach your child about it. One effective method would be handing out a weekly allowance. Of course, it is entirely up to you to decide the exact amount, but bear in mind your child’s maturity and needs.
For example, if your child is in lower primary, you might decide to give your child $10 to last him or her the full school week, which means a budget of $2 a day.
One of the quickest ways to learn how to manage money is simply to know where it’s going. If you give your child $10 but they don’t know where it went after a few days, it’s time to encourage them to keep track of what they spend.
You can also create a notebook or a “journal” where you and your child can keep track of the numbers and review them together for fun.
To incentivise your child and kickstart the habit of saving, consider setting up a reward system where you match dollar for dollar what is saved from the allowance after a month, or implement tiered rewards based on the savings targets your child meets.
3. Let your child make small financial decisions
Following the same narrative, getting your child involved in day-to-day decisions can empower them down the road. You can get your child to pick out fruits from the supermarket, or even vegetables for cooking. As they grow older, they can learn to compare costs or, at the very least, understand opportunity cost.
This builds up their self-esteem and this sense of responsibility adds weight to their decisions. Besides grocery shopping, you can give your child simple choices and let them make up their mind. For example. an ice cream treat or fast food dinner?
4. Do not ritualise tasks or attach a cost to routine activities
It seems that, nowadays, life takes on a much more transactional approach. Gone are the days when friends pop by just because. The moral obligation to bring gifts or an item as a gesture of kindness feels very ritualistic and forced at best.
We have perhaps allowed such habits to rule so much that meaningless items are exchanged on occasion, and if we are not careful, mindless gifting is something that your child might pick up.
Indeed, everyday activities should never be treated as transactions. Parents should inculcate a mentality of generosity and kindness that allows their child to do a good deed without expecting anything in return. This would undoubtedly help in not attaching a cost or a measurable value towards doing things for themselves or others.
5. Teach them that fun can be free and not funded
While this generation of parents will want to load up the days with endless activities from enrichment classes to indoor playgrounds to hobbies such as swimming, gymnastics, or other sports, it could be worthwhile to spend quality time away from such planned schedules.
Take them to a day out at the beach, or even hike through parks and explore the sights and sounds of nature.
Is the outdoors, not your cup of tea? Head to the libraries and spend hours discovering new worlds through books and possibly workshops organised for children or even go learn about history at the museums.
Mixing such experiences as part of their growing up can teach children that there can be fun without having to always buy stuff.
Of dollars and sense
It’s never too early to start teaching your child to be financially savvy. You can help your child become financially independent through education. Establishing a solid foundation in basic money management and budget planning will go a long way in preparing your child for life in the real world.
Another great way to do that is by bringing them along when you’re meeting your financial advisor or property agent. You can reach out to any of our Super Agents via WhatsApp or book a callback with us if you have any further enquiries.
Having your children around to be “a part” of such a big life decision will bolster their confidence in making smaller decisions, as mentioned in point 3. Actively point things out to them throughout your property transaction that may interest them to make them feel more included and interested in the journey. When they grow older, they’ll have to go through this too. Luckily for them, you’ll be there. And hey, we will be too.
This article was originally published on Planner Bee, your handy financial planning app! Learn more about managing your money, investments and insurance on Planner Bee’s blog.