BY RYAN TAYLOR, FINANCIAL LITERACY FOR YOUNG AUSTRALIANS*
Children learn so much from parents. Unfortunately, managing money is a topic you will also need to teach your children about. However, it can be very easy to put them on the right track early on. Some of the best ways to teach your children about money include:
1. Pay an allowance for chores completed
This is great for two reasons as it instills an understanding that work needs to be done to maintain a habitable household. Additionally, giving ‘pocket money’ to your children links money to being earned through work, allowing them to understand it takes time and effort to earn and causing them to think critically about the time taken to do chores before spending the pocket money made.
2. Create a bank account
This one seems obvious, however, it can be a minefield trying to find an account suitable for children. Most banks do offer accounts for students or children, however, make sure you look beyond your current default bank for the best deal. The most important thing is to find one with very little, or preferably no fees, as this can quickly eat away at the small amount of savings your child has.
3. Set up a saving plan
Sit down with them and talk about having a set amount they can save or put away now so that they can use it in the future. Make sure they are actively involved rather than just transferring money to their account or handing cash to them. This can be something as simple as putting $2 in a piggy bank each week, or with them having a ‘big’ purchase they want to buy which might cost $50 and choosing to save $10 a week for 5 weeks. By having a set amount of ‘pocket money’ each week, they learn to have to wait for larger purchases to buy. Actively talking to them about their goals and mapping out progress on a whiteboard or computer program so they can see their current progress.
4. Say NO to ‘Tap and Go’
Having a debit or credit card as the primary payment method can be deceiving, especially for children. Even as adults, it can be easy not to notice how much you’re a spending by just tapping a card for purchases under $100. For children to see and exchange money (cash) for goods purchased, being a tangible action, allows them to see they are now left with less money than they began with, helping them avoid falling for the trap of thinking they can ‘Tap and Go’ all purchases with no repercussions.
5. Actively talk about money
By actively talking about managing money with your children it makes them more familiar with the financial terms, while also making it a less taboo topic. Having a healthy relationship with money allows children to develop into confident independent young adults, who are more empowered and educated.
* Ryan Taylor is the founder of Financial Literacy for Young Australians (FLYA). With a passion for education and finance, he aims to inspire others, sharing the knowledge he learned over the past few years of dealing with his own finances.
For more information on Financial Literacy for Young Australians programs and services go to the website.