Just as you’d teach your child how to read, how to ride a bike or even drive a car, teaching your daughter how to manage her finances is essential in an increasingly cashless society.
While learning how to manage your money is a skill we all need to navigate in life, unfortunately we are not all created financially equal.
You will no doubt be aware that when it comes to wages there is oftentimes a lack of parity between what we pay women and what we pay men. You’ve likely read the headlines that women are retiring with half the super of their male counterparts. So how can you help your little girl – one day to be a woman – be her best financial self?
The truth is financial literacy starts at an early age. Just as we teach our kids ABCs and how to count – we should also be teaching them about the value of money, the benefits of delaying gratification, the purpose of philanthropy and the reasons behind why we should save for a rainy day.
Financial literacy is all about teachable moments and when it comes to money there are plenty of these. Just remember like any behaviour, children often model what they see around them. If you want your children to have good money habits you need to begin by setting the example. Kids as young as three can begin to learn the basics of good financial management. Follow these tips to get them off on the right track
You can’t teach this one early enough. In this world of quick fixes and instant access to just about anything, the concept of delayed gratification can be a hard one to grasp. But as my grandma used to say, ‘good things come to those who wait’. Psychologists suggest a child’s ability to delay gratification directly correlates with how successful they will be as an adult. Delaying gratification is an important life lesson.
Set up a savings jar, a spending jar and a bills jar and each week divide their pocket money amongst the jars. This way your child will be able to watch their savings grow, see how much money they have to spend and understand that while money is for fun stuff it, you also need it for essentials like utilities and rent.
Set a savings goal
Is there a toy your child has their eye on? Why not encourage them to save up the money for it. If it is something that is very expensive you can offer to match the fund so that they reach their savings goal sooner. (you don’t want the to get frustrated with the savings process). The goal for you as a parent is to set them up to save successfully for something they want. Keep them excited and motivated by creating savings charts, counting their savings each week or even offering up bonus chores to earn extra cash to give their savings a bit of a bump.
Make good choices
Teaching your kids about value for money is another important lesson. You aren’t a bank and don’t have an unending supply of cash to meet their whims. Help them to understand that if they spend their money they don’t have more to spend until the next time they earn money, so they should spend wisely. Get your kids involved in the spending decisions of your household. Are you taking them to the movies? Talk about how you can bring treats from home instead of buying them at the cinema and plan how you might spend the money you save on something else instead. Let them grasp the concept of deals and the pros and cons of generic and name brands.
As your children get older you can expand these lessons, teenagers can grasp the concept of compound interest and save for long term goals. A child as young as ten will be able to understand opportunity costs if they are laid out in terms of what they may have to give up in order to get the bigger better present and even a five-year-old can begin to grasp the concept of giving and philanthropy.
But unlike a traditional lesson, which can be learned by setting aside time every week; teaching financial literacy is something you and your children need to practice every day. If you do, the benefits will be bountiful.