MONEY SPECIAL with Michelle Hutchison
Michelle Hutchinson explains why now it is more important than ever to teach your children how to manage money ry to imagine how children see the world in terms of money. Your money is managed mainly through electronic means nowadays,and so kids today have a less physical understanding of money. They see us magically hand over a piece of plastic and receive toys, food and games in exchange. Now, it’s more important than ever to teach your kids good money habits. My son is only two, but I’m already showing him the value of a dollar. You might think that’s young, but through my job I’ve seen firsthand how it’s never too early to help kids develop a healthy attitude toward their finances.You don’t need to be an expert to teach your kids good financial sense. Here a some simple steps you can take. Ages 0-8 This is an important stage in a child’s development, with their understanding of the world just starting to take shape. If your child is in this age bracket, you can start to take some of the ‘magic’ away from money. Instead of going to the grocery store, spend some time at the farmers’ market. You can explain to your child that the farmers grew the produce, and when you pay in cash explain how they will use that to grow more produce. They can see the market in operation. Another way is to take your child to the bank, so they get a feel for the physical exchange of money. There are also various games that teach positive money habits, with some financial institutions offering these games for free on their websites. You can also play a simulation board game, such as Monopoly or The Game of Life. Ages 8-14 By this stage in a child’s development they should have some understanding, if only basic, of the way money works. To support the information they learn in school you should show them how finances work in the real world. One of the first steps is helping them open a bank account, if they don’t have one already.You can encourage them to compare their options and then let them choose the bank account they want so they learn to take responsibility. You can also provide them with a modest allowance so they can start to save for their own purchases. It’s very important to teach them the value of waiting until they have sufficient money, which means no advances on their pocket money. It’s also important they see their allowance as an exchange for something, so perhaps set them a weekly chore in order to earn it. Ages 15-21 By this stage your child will already be making financial decisions. They will be buying things on their own and start to think about their future. You need to support them, but June 2014
Teaching your kids
good money habits
at the same time let them make their own decisions. A child can start working in their teens, so during this period in their lives it may be a good idea for them to get a casual job. Even by working a couple of hours a week, they can see how they are rewarded for their work while learning valuable employment skills that they can use later on. This is also the stage to start teaching them about credit, interest and paying bills. Depending on where they sit in this age bracket, they may still be too young to get a credit card, but they can see how you manage yours. Show 38
them any budget apps or spreadsheets you use and explain how your credit card works, and how you pay your bills. If they ask to borrow money you can explain how it would work if they borrowed money from the bank, or even just charge them interest yourself. Your kids are never too early, or too old, to be taught good money sense. No matter what stage they’re at, make sure your kids are developing a healthy attitude towards money that will see them through their adult years. Michelle Hutchison, money expert courtesy finder.com.au