IS YOUR CHILD MONEY SMART?
Understanding and managing our finances is an important
skill for all of us. "Save your
money and your money will save you" - Jamaican proverb. At school your child will complete money sums
and word problems as an exercise but not necessarily relate their learning to
the real world. Children may observe you paying for things with a credit Xcard
or via the internet without actually
realising that you have first had to earn that money and that you have used
money to pay for the item. The concept
that money is easily available for all may also be reinforced when they witness
you withdrawing money from an ATM.
However at home you can develop your child's understanding of money in
general as well as an understanding of
saving, spending and budgeting in the real world so that they are money smart
throughout their lives.
Discuss what money is with young children explaining how we
need it to buy things and how it can be earned. Tell them about your
employment, current and past. You may
recall how you completed chores to earn money as a child. When you are out and about, point out people
who are working e.g police, gardeners, builders, etc. Let children know that
things cost money, sometimes a little and sometimes a lot, so that when buy
something you have to consider this.
Play board games with your child that involve money and spending.
With your child discuss the difference between need and
want. Share with them the things that
all living things need to survive: water, food, air, shelter and warm. (Older children will be more aware that not
all children have these things and may want to raise money for charities either independently or at school and
organisations such Scouts or
Girl Guides). Share
with them the things that money cannot buy; a loving family, a sunny day,
friendship, etc. Write a shopping list
with your child, explaining that there are some things that are essential and
other things that are not. For example,
you might say, "We need to buy milk for the breakfast cereals and for you
to drink because it helps you grow strong.
We are buying cake today because your friend is coming for tea and it
will be a tasty treat for you both."
Shopping with your child is a good way to encourage an
understanding of spending and budgeting with your child. Involve your child with the shopping,
encouraging them to compare prices, consider bargains and special offers and
explain your reasoning behind the choices you make. For example, you may not choose to buy a two for three offer on punnets of strawberries because you know that
they might not all be eaten before they go rotten. Many children enjoy playing shop. Up cycle empty food packets and encourage
children to price their items to sell or create their own special offers to
tempt their customers to buy. If
possible let children use real money for this, you could use foreign coins from
a recent holiday abroad. Some children
may want to consider using credit cards which they could design and colour
themselves from cardboard so that they can begin to understand how credit cards
replace money and how they work.
I have previously mentioned how some young children may not
understand how credit cards and ATMs work or have very little knowledge of
banking. Explain how banks work and how
credit cards are a different way of spending money. Some children may enjoy playing banks in the
same way as they play shops. Some banks
and building societies have accounts specifically designed for children. Discuss how banks and building societies can
support you to save money for an expensive item and reward you for using their
facilities to do so by paying you interest.
At the same time discuss how banks may offer you a loan for buying very
expensive things such as a house and how you have to pay them interest. When viewing money loaning adverts on TV or
in magazines encourage children to note the interest rate. Children are often surprised about how much
they have to pay back on a loan. This helps them to understand that a taking
out a loan has to be a very deliberate and considered choice.
Internet shopping is increasingly a popular way to
shop. Again explain to younger children
how this works. With older children
discuss how some offers look very tempting; almost to good to be true. Look at these offers, pointing out the hidden
extras in the small print. Whilst doing
this reinforce the importance of being safe
on the Internet. Explain that they
should not give out any personal details and that there are companies and people
who will use their details to defraud them.
This would also be a good opportunity to discuss with your children
about not chatting on line with strangers, giving any details about themselves
or agreeing to meet anyone they have chatted with. Remind them that they should tell you if they
feel threatened when chat rooms or if anyone asks about them or encourages them
to meet them.
You may decide to give your child pocket money which they
could earn through completing chores at home so that they can experience having
their own money to spend in addition to any that they may receive for
birthdays, etc. If your child does have
their own money, encourage them to divide it into three - savings, spending
money and money to share. Allow them to
make their own mistakes. So if they want
to buy the latest console game but keep spending their money on sweets keep
encouraging them to make a better choice.
If possible do not 'bail' them out or if you do consider charging them '
interest' on any loans that you make. A
strategy to encourage your child to save is for you to match their
savings. Again encourage children to
research a and compare prices and offers on the item that they are saving
for.
Encourage your child to be enterprising so that they can
earn money for themselves or others.
Obviously you need to emphasise the need for them to keep themselves
safe. The Scout Association no longer
encourages its members to go door to door offering to do chores for the
occupants - Bob a Job - as it recognises the dangers to children doing this.
Recently I saw two teenagers selling lemonade to the spectators as they walked
passed their drive. In the same way,
your children could sell vegetables that they have grown or cakes that they
have baked. They may decide to leave
their goods out on a table at the end of the drive so people can buy them,
trusting that the buyer will put their money in the bucket provided. Certainly, if some one does not pay or even
takes their money it is a hard, yet essential, lesson to learn that there are a
few people who are not honest. As I have
previously mentioned above, Many schools encourage their students to raise money for charities through a variety
of activities. Some schools are very
good at letting the children organise this for themselves, developing skills of
collaboration, reflection, resourcefulness and adaptability in the process. The
teachers are there in an advisory role to support those children. In my experience the children who do
participate in such fund raising events have a great deal of fun and feel a
huge sense of pride in their achievements.
You can encourage your child to budget and manage their
finances by modelling how you do this.
You can draw a circle to create a pie chart to roughly estimate the percentage
of your income you spend on household bills, food, your child, how much you are
saving. You may also wish to share one
of your statements with your child explaining so that they understand that
income and outcome. The following
strategy may support to be money smart and encourage them to make good choices
with their money:
Don't let your money melt away - SPLIT IT!
Save and set limits
Prioritise
Live within your means
Impulse buying is bad
Track your expenses
You may wish to plan a party or even a day out with your
children with a given budget so that together you can research and make
decisions. These are obviously real life
situations but you can also encourage children to research and plan an event
within a set budget in an imaginary situation.
For example, you might give your child a copy of a store catalogue and
set an imaginary scenario that they have been asked to spend a set amount on
equipment for the local playground. What would they buy? How many of each product should they get? Can they take advantage of any offers etc?
These are just a few things that you can do to encourage
your child to be money smart. Whilst helping children to understand that money
does " make the world go round" it is also important to develop the
responsibility of managing their money sensibly; encouraging them to reflect on their needs
and wants and that there are things that money cannot buy. "Do not educate your child to be
rich. Educate him to be happy so when he
grows up he'll know the value of things, not the price." Anon.