Money Smart Kids

In the world we live in today it is absolutely essential that children are raised with some financial intelligence. This is something that should really be a mandatory school subject, but I don't see that happening for quite some time.

Everyone needs money to survive. This is certainly true with children. If children are raised to value each dollar, taught about investing, independence and responsibility, then they will grow into prosperous adults. Often, when children become teenagers and they are all of a sudden thrust into the world of finances and have to begin to fend for themselves, it's a little overwhelming and man don't know what to do. If children are taught about money from a young age, then they will likely become money smart teenagers, and then money smart adults. Our society today is encouraging of bad money spending habits. I was in the bank yesterday and there is a new credit card advertisement with a picture of a young woman, a pile of shoes higher than her, and the phrase 'new low interest rate so you can afford more'. What a shocking value to be teaching and encouraging!

We live in a wonderful country full of many freedoms. However, if your children want to independently own their own piece of Australia when they grow up, planning must start at a very early age. Children can learn to understand the concept of money from around three years old. From this age you can explain to children why they can't have everything they want because it costs money. It is then helpful to introduce pocket money. Many parents have different philosophies on how they like to give their children money. Some give one dollar and week for the age of the children eg. A three year old gets three dollars a week, and eight year old gets $8. Or you can have jobs for them to do where they get a set reward for each task. Eg. 50c for feeding the dog. This way they understand that if they want something, they have to work hard for it. They will probably appreciate that new toy a whole lot more too.

Once they have learnt the concept of money, when they reach school age they can start to learn about saving for BIG things. Children can have their own bank account and see their money adding up each week as they save. If they have enough self control, they can leave all their money in one account, more common though is to put your child's money into a saving account which they can access at 18. Even if you put $10 a week from the age that they're born, they will have almost $10,000 by age 18.

There are simple things that you can do with your child from the age when they can count. A great idea is to divide money into four different areas. Spending (for things like toys, food, movies etc), saving (for the big things like the play station they really want, a car when they're older. These are purchases that are large, but are not going to create them income). The third is investing; this could be for things like property and shares. The fourth is for charity. I believe it is very important for children to know how lucky they are to have so much; to give their money to people in greater need will be a very humbling experience.

Everyone has a different view on children and money. Some believe in pocket money, some don't. Some earn money through chores, some get he same amount of dollars a week as their age. Whatever way you like to do it, giving children money and responsibility over their money will in turn teach them to respect it, respect you when you won't buy them that toy they're screaming for, and become money smart.

Good luck!

Tina Tower - Begin Bright Founder, Teacher and Mum