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Three practical ways to raise money-smart children

by , 23 January 2013

Good money management is one of the most valuable skills you can pass on to your children. It's never too early to start teaching them about money. Doing this means they'll know how to put their money to work for them and will be less financially dependent on you. You can teach your children how to be more money smart in three practical ways.
It’s a myth that it takes money to make money, says Gavin Fourie, editor of Unconventional Millionaire.

“People think that those with wealth were born into wealthy families. Yes, there are some rich people like that. But many millionaires actually started with nothing. Instead of inheriting the money from parents, they accumulated it themselves, slowly and surely over a number of years,” Fourie explains.

That’s why good money management – not money – is one of the most valuable skills you can pass on to your children.

And showing your children the basic steps such as how to budget their pocket money and shop around for the best price, will establish good money habits for life, says The Australian Securities and Investment Commission’s MoneySmart website.

Want to get started? Good Housekeeping offers these three easy, practical ways to teach your children to be money smart.

Three practical lessons to help you raise money-smart children

1. Make them work hard for the money

One of the most important lessons you can teach your children about money is that you have to work for it,  says Good Housekeeping. Pay your children pocket money for doing chores and help older children find a part-time job. Children think twice about spending their money when they know how hard they’ve worked for it.

2. Explain budgeting to your children

Budgeting starts by setting a goal and then coming up with a plan to achieve that goal. A good idea is to give your child two jars or envelopes – one for spending and one for saving. “When you give them their pocket money every month, they should put at least a quarter into the savings jar or envelope and the rest into the spending one. This way, your children can keep track of their spending as well as how far they are from reaching [the goal they’re saving for],” Good Housekeeping’s article explains.

3. Teach children the value of rainy day savings

If your children come to you for extra money when all their pocket money’s been spent, don’t give in! Explain to them how this situation could have been avoided if they’d planned better. Encourage your children to put loose change in a piggy bank or their savings jar for rainy-day situations like these.
 
Put these three tips into practice with your children today and we’ll soon have a nation of money-smart adults, eager to pass their money management skills onto the next generation!


Three practical ways to raise money-smart children
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