You’re never to young to learn about finances. From the age that we start playing “shopkeeper” we’re already thinking about money. We see it exchanged in stores, we’re given a little by the tooth fairy when our teeth fall out – but what do we actually know about cold hard cash?
With financial education in South Africa amongst the worst in the world and the country’s credit rating recently downgraded to junk status by S&P Global, there’s never been a more critical time to teach our young people about money; from the importance of saving, to the correct ways to use credit.
If you’re keen to help the younger generation approach their finances more shrewdly in the future, helping them to build a more financially stable future, it’s time to draw inspiration from businesses & organisations like Wonga who offer loans in South Africa but also provide invaluable resources designed to educate everyone about finance.
So which are the most important money lessons to teach children?
- Where does money come from?
Understanding that money comes from work is one of the first lessons children need to learn in order to appreciate the value of money. When we’re little, it’s easy to think that money grows on trees or is an infinite resource. That’s why we’re always begging our parents for sweets, treats and presents.
If you can teach your children that money is a finite resource gained through hard work, you can help them appreciate its value. Exchanging small amounts of pocket money for the completion of small tasks (i.e. tidying their room or doing the washing up) will help kids grasp this concept.
- What is a budget and how does it work?
The next step is teaching children about spending vs. saving. Helping them to save up for something they really want is a great way to help them understand the basics of budgeting. If they have regular pocket money, help them work out how many weeks they’ll need to save for before they can afford the item they want. If they have smaller items they’d like to buy, help them do the maths to factor this in. You could even put a chart on the fridge to help mark their savings progress.
- How can you keep track of your money?
A chart on the fridge is a good basic way to show kids how to keep track of their money, but when they get older, underscoring the importance of keeping records will become even more important. Encourage them to keep a notebook which logs their savings and what they spend with a running total. This approach will prepare them to keep a close, responsible eye on their finances when they are older, instead of spending recklessly.
Have you started teaching your youngsters about money? Do you have any tips or tricks to make the learning process fun? Share your ideas below.