It’s never too early to start teaching your kids the value of money. My parents taught me to respect money from the age of six and this has been crucial in my financial stability as an adult. At 34 I have no credit card debt, purchased three positively geared real estate assets and healthy savings in the bank. Here are a few key lessons my parents taught me, I hope they help your kids too!
1. Learn How To Earn
Money had to be earned on tasks performed in and around the house. There was no standard allowance or pocket money handed out.
My parents placed a chore list on the fridge with an amount you could earn weekly. Wash the dishes – $5.00, wash, hang and fold clothes $10.00, no work, no money.
When I was seven, skipping chores meant I couldn’t ride my bike to the shops and buy fish and chips (wrapped in newspaper of course). When I was 13, laziness meant I couldn’t see Dumb and Dumber at the movies with the cutest boy in school (heartbreak!) When I was 14 hard work meant I could buy Charles Barkley basketball boots. (Ok so these aren’t high on every girl’s wish list but I’m a tomboy after all.)
Set age appropriate chores and rewards based on what your kids can manage and what you can afford. They’ll quickly understand the value of money!
2. Save To Buy
A great way to teach your kids to save is get them to select something they would like to buy (ensure its financially achievable) and the amount it costs. It might be a toy, skateboard or Frozen DVD. Write it up on a piece of paper with the amount. Each week write the new amount they need to earn so they can see their savings at work.
When you pay them their allowance ask them how much they would like to set aside to buy their desired item. This empowers them to be a part of the decision making process to save for the item they want.
When I was 11 my Mum asked me this and I chose a pair of Stussy pants. Mum took me to General Pants and helped place them on lay-by so I wouldn’t miss out. Once I saved enough I went in with my zip lock bag of coins. Embarrassingly the bag split and coins rolled all over the floor! But after that humiliating experience I remember the feeling of achievement.
3. Investing In Their Future
A friend told me about a great family project he taught his kids on investing. Aged 11, 10 and 6, he said they would get $50 each to invest in a company of their choosing. Providing them with a very basic overview of how shares worked and with the newspaper laid out in front of them, they each picked a company name from the Australian Stock Exchange.
The children Google’d the companies to understand what they did and whether they could afford to buy the shares. After their research was complete he purchased the shares. Each month they would do a “money check” to see how their shares were performing. The kids loved this and often asked “Is it time to do a money check yet?”
If you implement these three key lessons I’m certain your kids will certainly understand the value of money and be better for it. In fact they may end up like my friend’s child, Jake, who is destined to be an entrepreneur with this letter he wrote to the tooth fairy!
Amanda is a marketing and events professional with a passion for food and travel. She is currently travelling around Europe with her husband, Skip, who is the Head Chef for Cirque Du Soleil’s show ‘Kooza.’ Together they write about their circus adventures around the world on their blog “Graze the Earth”. You can follow their travel escapades at: www.grazetheearth.com.au or Facebook: Graze the Earth.