One of the most important skills for a child to learn growing up is how to be financially aware. In New Zealand particularly, these skills tend to fall by the wayside as we rely on the ‘she’ll be right’ motto that is our lifeblood. But teaching your children how to manage money and avoid unnecessary debt may be the best thing you can do for their futures.
Give them pocket money
I think at some stage in our childhoods we all received a small amount of remuneration for helping around the house (although we were probably just as happy with a sweet treat from the dairy), so you’re most likely aware of what pocket money is.
There are some pitfalls to avoid with this one however – you can’t just throw cash at your child every week and expect them to know its value. They should earn this payment by helping with the dishes and other household chores so that they understand that not everything is handed to them on a silver platter.
Buy them a piggy bank
It may seem old-fashioned, and of course many things are done digitally nowadays, but there is real value in depositing cash into a small vessel like a piggy bank. Aside from allowing them to be physically aware of how much they have, this is also a great opportunity for children to understand that there isn’t just a magic card that can get them whatever their hearts desire.
Let them make their own purchases
I’ve often seen children handing over their hard-earned coins to the cashier in a store, and, aside from being the cutest thing, it’s a very important lesson for them to learn that they need to provide money to buy that new toy.
It’s also a good idea to take them shopping for their own purchases as it helps them to realise how much something costs in relation to how much they have to spend. If something is more than they can afford, you can teach them to come back and buy it once they have saved up enough.
Be careful with your wording
To make sure there aren’t any negative associations with money, it’s important to choose your words wisely. Instead of saying, ‘We can’t afford that,’ or ‘That’s too expensive,’ use a phrase that is more positive and expresses a choice. This could be something like, ‘We choose not to spend our money on that,’ or ‘I’m choosing to save for *insert something special* instead.’
As I mentioned above, children are sponges, and the last thing you want is for them to be worrying about whether mum and dad have enough money, or learning that not having enough is embarrassing and shameful.
Set up a KiwiSaver account early
Even though they won’t be working for a number of years yet, it’s a good idea to set up a KiwiSaver account for them as early as possible. You can contribute as much or as little as you’d like – even $20 every now and then will make a big difference in the long run. Having KiwiSaver when they’re young will put them in good stead to be successful in the future and will provide them with a great head start when they begin their careers.
Even baby steps (excuse the pun), like employing the tips above, can have a huge impact on how your child grows up to perceive and use money. Teaching them to have a healthy relationship with money is absolutely key to growing financially smart Kiwi kids.
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