Basic skills in earning, spending, saving, investing and giving away money can affect how your kids live now and in the future.
Like any life skill, financial skills will take time and effort to master, however a strong foundation to build on, together with a supportive environment, can help.
What can you do to help your children build their financial skills? Take a look at our nine steps for starting to teach your kids about the concept of money.
- Explain the concept of money. Show them cash, coins and debit cards, explain that money can be exchanged for goods and services. Use examples they can relate to, like grocery shopping or haircuts.
- Establish a daily/weekly age-appropriate chore that is linked to pocket money. Teaching your kids that money is earned and, to use the age old saying, not something that grows on trees.
- Explain the difference between what we need and what we want to spend our money on. Ask them to write a list of the things they need and want to teach the difference between necessities and luxuries.
- Take your kids shopping and ask them to write down the cost of the things on their need and want list. This will reinforce that money provides a common base to value and exchange goods and the importance of comparing pricing before purchasing items they need or want.
- Provide your kids with three piggy bank/jars, labelled ‘needs’ ‘wants’ and ‘savings’. Ask them to deposit the following percentage amounts into each; 50%, 30% and 20% respectively to teach the importance of managing money in a responsible way.
- Get your kids to decide from their list of needs and wants, what they would like (and can afford) to purchase now. Let them know that their ‘savings’ piggy bank is for long-term saving and shouldn’t be spent at this time. It's important to let them know that they may not be able to afford all the items on their list right now, so they will need to compromise on what they purchase.
- Take your kids shopping to buy the things they want to buy now, teaching them that money is being swapped for their desired items. Remember to explain that if they use a card to purchase that there is actual money on the card and items are not ‘free’.
- Get your kids to donate a small amount of their ‘wants’ fund to charity. Remind them to support their community if they’re able to help.
- Sit down with your kids and write out a savings plan for the rest of their desired items. Help them understand how long it might take to save up enough money to purchase everything on their list. This will teach your kids about the benefits of financial goal setting.
If your kids are a little older why not explain:
- The use of debit and credit cards, and the difference is between the two.
- Loans and interest rates.
- Online and digital purchases and the fact that these purchases still involve real money.
- Savings and everyday accounts.
Getting started on saving
Did you know that P&N have a kids account? Our Way Cool Saver account is specially designed for kids to help them start on a regular savings plan. With no account fees, limited transaction fees and no minimum monthly deposit required to earn interest, it’s an easy to understand account that will get your kids off to a great financial start.
- Just for kids - between zero and 15 years of age.
- Start saving today - no minimum monthly deposit required to earn interest and no minimum opening balance.
- Automatically save - with P&N's Pay&Save. Link your & Transaction Account with Pay&Save and you can round up Visa Debit purchases to the nearest dollar – and save the difference into your child's Way Cool Saver account.
- No monthly fees.
- Fee free transactions - keep more of your money. A range of fee free transactions are included in your Way Cool Saver Account.
- Teach your kids the true value of money - give them access to the account with an optional card (for children over 12 with parent/guardian permission).
- Easy access - kids can access their funds via SMS banking. They'll need your permission for Internet Banking, Mobile App and Phone Banking.
Visit your nearest branch today to open a Way Cool Saver and get your kids started on the road to good money habits.