Talking about money as adults is not easy, let alone with your kids. In fact, for a long time the topic has been taboo.
However, the ability for kids to navigate personal finance is becoming increasingly crucial in today’s digital world, where the visible exchange of goods has almost completely disappeared from the picture. While we’re not talking about saving for a home just yet, introducing children to the concept of saving, earning and spending is essential for their future financial success.
When my brother and I were growing up, we learnt about spending and saving with money boxes and piles of notes and coins. We’d hoard cash for the day we could fill our hands with our savings and drop them on the counter at the local toy store. By today, things have changed. Much of what our kids want to buy (and need to learn to resist!) is online, and the tools our parents used just aren’t as relevant for us as parents. That’s why we founded Spriggy, to help raise financial literacy in Australian kids and prepare them for life in our increasingly cashless society.
So how can you set up your kids for financial success? Here are some practical tips for getting your kids thinking about money from a young age.
1. Start as early as possible
There’s no better time than the present to start talking to your kids about money. Kids are more perceptive than we often think. We’re not talking a sit-down lecture, rather it’s about incorporating it into everyday conversations and actions – it’s as simple as explaining where the money comes from next time you swipe your card at the checkout. Setting real-world challenges, like inviting your children to budget for the weekly supermarket shop, will help them develop a deeper understanding of how money works.
Starting early is essential to empowering children to be responsible and independent when it comes to purchasing decisions. Tools like Spriggy allow kids to get hands-on with digital money from as young as eight, but there’s no reason why you can’t open the conversation with them earlier.
2. Communicate openly
Be open and honest. Almost one-third (29 per cent) of Aussie parents admit to being in financial debt previously, and want to prevent their children from experiencing the stress associated with debt. The key to doing this is to share your experiences with your kids – allowing them to learn from you rather than repeat your mistakes.
Do this by talking to kids on their level. Children are used to being up close and personal with technology from a young age – so use this as a tool to engage them in conversations about money. Using a pocket money app empowers children to track their saving and spending, so make sure to check in regularly and have conversations about their goals and progress.
Mobile phones no longer need to be a distraction; if kids are on their phones anyway, they may as well learn to be financially responsible in the process!
3. Implement a pocket-money system
We all remember earning pocket money for household chores or delivering the local newspaper, and there’s a reason why – it taught us the concept of earning. Setting up a weekly allowance or pocket money system for your child will teach them how to manage money responsibly, while they are still young enough to be guided by you. By experiencing the time and effort it takes to earn their keep, your kids will be more mindful when it actually comes time to spend it.
4. Set-up savings goals
With transactions being increasingly digital, it’s becoming more and more difficult to demonstrate how much an item costs. In the online world, where instant gratification is second nature, it’s easy to fall into the trap of “ask and you will receive”. Next time your child wants the latest video game, toy or gadget, set up a savings goal so that they can see what it actually takes to get there. Working through this together is an opportunity to talk about positive spending behaviours together and help avoid them from splashing out.
5. Work together in practical situations
Whether it’s setting up a lemonade stand on the street, or household chores, getting children involved in practical activities where they need to handle money is a sure way to promote healthy spending habits from day dot. Repeated use and practise over time will also help them to make smarter decisions about the money they receive and spend. Soon enough, they’ll realise how they can make their money go further by searching for a better deal, or taking on extra jobs to reach their savings goals faster.
About the author
Mario Hasanakos is the co-founder of Spriggy, the financial education company that helps families teach kids about earning, saving and responsible spending in an increasingly digital world.