In this modern age of easy access to money, it is very important that parents lead by example when it comes to teaching children the value of money. If the parent sets their limits on spending and show their children that they are working within a budget, chances are their children will develop similar values.
If you have not already done it, you should create a budget for yourself. This budget should include both needs and wants. Depending on your income, some can afford more wants than others. The question is:
Do you want your children to know the difference between needs and wants when it comes to their money
Each parent will have their own views on when and how they should give their children access to money for which the child is responsible as to how the money is spent. They also need to learn, that if they have an allowance, when it is spent there will be no more until the next allowance day.
The first time a child is given an allowance for a specific purpose, they are likely to rush out and spend it all, without consideration of the value of the items spent. Take the example of giving your child a clothes allowance. It may be that the first time, they rush out and buy a very expensive outfit and then find for the remainder of the budget time they can’t buy the other clothes they need.
Somewhere along the way, it is good to demonstrate the value that can be found in second-hand clothing stores. It may be that it is here you set by example by taking your child with you when you buy, a second hand an outfit that you need for just one occasion. Many of these high-end clothes have either not been worn for more than one or two special occasions, and the cost is probably going to be about 30% of the full retail price. If your child sees this as a sensible solution for a parent then they too may follow by example. Imagine their excitement when they find an outfit they love in the second-hand shop for $2.00 which may have cost $20 new.
It’s almost like going on a treasure hunt.
If you are looking for guidance on how to teach your child the value of money, I believe the first place to start if with ASIC’s MoneySmart, Teaching Kids About Money.
While it is an American site, Parents, have excellent suggestions as to what you should be teaching your children about money for different age groups.
The final step may be to give your children their own card where they can spend their money, and you can top up their allowance as needs be. Most of these apps have a fee, but it may be worthwhile looking for one that suits your needs. One of these is Spriggy and could be worth consideration.
Glenis Phillips SF Fin – Designer of Financial Mappers and Advice Online
Disclaimer: Financial Mappers does not have an Australian Services License, does not offer financial planning advice, and does not recommend financial products.
