Mary says to her daughter: “sorry sweetie, I can’t buy you that toy now – we’ve got no money left till payday”. Lebo, her four-year-old daughter replies “Just go to the ATM machine Mum! The machine always gives you money - you just have to put your card in the wall.”
How simple this process seems to a young child. Lebo does not understand what is really happening (and at her age who can blame her!) At some stage though, it is imperative that we teach our children the basics of money.
A child’s-eye view
How much have you taught your children about money, and when is the best time to start?
Looking at the world from a child’s point of view makes the world look simple and easy. We don’t want to take this innocence away from them, but we have to start to teach our children basic money skills - so that, as they grow up, they can avoid the money mistakes and live financially secure lives.
A Young Adult’s View
Kabo phones home from university: “Mum, I’m desperate – I really need some money.” His mum knows that he gets a monthly allowance – why can’t he learn to live within it?
Let’s face it - you don’t want your child growing up and going out into the world having never learned to live within a budget. At some point, our kids have to learn how to be responsible with their money. They’ll either learn from us, or make the same mistakes as we have – or even worse ones - with their own money.
The Bank of Mum & Dad
Children of today seem comfortable with asking the parents for money – even well into their twenties! When they first leave home we know that we, the parents, are often expected to help them out with cash injections. In effect, their new found independence is an illusion - they are still dependent on the Bank of Mum and Dad.
Today we’ll share some tips and skills that you as a parent should start to introduce to your children in the safe environment of “Under your Wing”. That way they’ve got a more secure (and successful) future when they become independent as adults.
“Money grows on trees”
Although this old saying is amusing, we all know money does not grow on trees: it is earned by hard work. Children see us going to work every day, but they also see us using plastic bank cards to buy things or drawing money from the ATM. How do they know that this source of money is limited?
Money From The Well
Draw your child a picture of a well, and explain to them how it works. Then use an analogy - at the end of each month, the well is filled with money - earned from work. During the month, instead of using a bucket, Mummy and Daddy draw from this well
We also have our bills coming out of this well during the month, things like our water and electricity, our rent, our money for transport and food. If our well runs out before the end of the month, we’ll be in trouble.
Then towards month-end, if the well is nearly empty, your children will be able to understand that there is no money spare for treats, sweets and toys. “I want I want I want”
We’ve all been nagged by our kids for something they want (some of us can still remember nagging our own parents). When children get an idea in their minds that they want something, they always let their parents know about it!
Use these times to start to explain to them about savings. Savings is a way that they can have anything they want, but they have to be patient.
Get your child a “piggy bank” (or a simple tin or jar with a slot for coins) and glue it shut. Your child can push their money in but not easily get it out again.
Put a picture of the object that they really want (and the price of it) on the piggy bank. Once a month, allow them to count the money inside and see if they have managed to save enough to buy what they want. This is teaching them a basic form of budgeting and saving.
Teaching your child about keeping their savings safe and secure is also important. The ‘piggy bank’ must be somewhere away from prying eyes, and also away from temptation of little fingers.
“Bank Your Change”
If your child has decided to spend some of their pocket money on something, show them they can still save the change.
They should be encouraged to put their remaining change back into their ‘Piggy Bank’ at home. They’ll soon learn that lots of small amounts of money saved quickly add up toward their goals.
By following these simple easy steps, your children will soon be easier to go shopping with, will beg you for less and will have a few goals of their own. These techniques will give your children the tools toward securing their own Financial Wellness!
Author: Tshepiso Kgakatsi – Training Manager with Kalahari Training Institute (Pty) Ltd. © “Botswana’s Premier Provider of Accredited Vocational Skills Training” Specialising in Financial Education we now also offer Debt Collecting services for companies with bad debtors and Debt Counselling services for those in financial distress. For help and information contact them on 3697912 or 72309718 or firstname.lastname@example.org * Names in this article have been changed