If you don’t want your children to treat you like an ATM, start teaching them about money early – how to earn it, how to save it and how to spend it wisely.
You can begin at any time, but it’s best to use simple concepts such as the difference between needs and wants early in the child’s cognitive development.
1. Start with a piggy bank
This concept can flow through to earning money. Should you decide to give your children pocket money, start small and if they are very young, use a piggy bank so they can see their savings physically grow.
It’s best to make it clear that the money comes with certain obligations, such as keeping their bedroom tidy. Children can see an unconditional allowance as an entitlement.
To help kids understand how saving works, ask them what they really want – it will probably be the latest toy advertised on TV – and tell them you will put money aside regularly to help make their dream come true.
2. Make a chart
As kids get older, you can show them how the money is growing by making a chart and plotting the growth of their funds. And when the time comes to buy their toy, show what happens to the balance when you remove its cost.
If you make the withdrawal at an ATM, you can explain that money doesn’t just come out of the machine when you need it, and it’s taken from what has been saved.
3. Learn to earn
As kids’ demands get more expensive, you can start paying for chores on the provision that the money must first be saved before it can be spent. You can reduce the pay if they don’t complete the chores so they learn to finish jobs properly.
This encourages a good work ethic, which will stand them in good stead when they want to get their first casual after-school job.
4. Prepare for the first job
Distributing the local paper, handing out advertising flyers, tutoring or delivering items for a pharmacy are popular ways to earn those first regular pay cheques.
Pet sitting or dog walking are great for kids who love animals, and if they’re old enough and responsible enough, perhaps they can start babysitting.
Help your child write a CV to hand deliver to potential employers.
They can also sell some of the things they no longer want, either over the internet or through a garage sale.
5. Show how to save when spending
Grocery shopping is a good place to start teaching the lesson on how to spend properly. Get your children to help with the shopping list, then let them gather the items from the shelves.
Let them take their own money so that when they start pestering you to buy something, you can gently suggest they pay for it themselves.
Older children always seem to have their eyes glued to a screen, and you can use this to teach them how to use the internet to shop around and find the best deals. Show them how to spot a scam – if it sounds too good to be true, it probably is – where not to go online and what information not to share.
We’re here to help
AMP has plenty of ideas. You can get your child started with a savings plan or talk to them about budgeting using our calculators or tips. If you’d like to talk to a financial adviser, call us on 131 267 or use find an adviser.
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