TEACH KIDS TO BE FINANCIALLY SAVVY
Teaching your kids how to save from an early age is one of the best things you can do for them. It gives them the best start in life, to ensure that they can make sound financial decisions once they leave their safety nest – home.
“Taking into consideration that your children will be the economic contributors of tomorrow, the importance of educating them to be savvy with their finances cannot be underestimated, says Lance Solms, Managing Director at Itransact.
With July being savings month, we’ve put together some tips on how to ensure that your kids are financially fit… because it’s the key to their success.
Needs versus wants
“The first thing to teach a child is to recognise the difference between a need and a want,” says Nelly Mofokeng, MD at Junior Achievement South Africa (JA South Africa). “Grasping this concept will have a positive impact on a child’s financial future. Additionally, it is not enough to simply recognize the difference, parents should explain why money gets spent on a need before a want.”
Knowing the difference between a ‘want’ and a ‘need’ can help save money,” says Mr Solms. Many of the items kids spend money on are things that they want rather than need. Teach them that if it’s not needed for survival, then they should let it go – at least until they can afford it, he adds.
Ms Mofokeng adds that, “One of the best ways for children to understand how to differentiate between wants and needs is to take them shopping. As you put things in your basket, ask them if the item is a want or a need. Let them explain their decision, then give them your answer.”
Things cost money
Although this may seem like a given, we can sometimes take for granted that our children, especially the younger ones, don’t necessarily grasp how much things cost and often think there is an endless supply. “Taking the time to teach children the value of money and explaining to them how money is made and where it goes, in an age-appropriate manner, can mean the difference between being nagged every time you go to the shops for the latest toy and a keen respect for the fact that ‘money doesn’t grow on trees’,” says 1Life.
Piggy banks and saying no
Young children respond very well to the concept of saving if they have a realistic goal to work towards. Teach your very young children about saving money through a piggy bank concept. “There is nothing wrong with telling them they can’t have an item because you don’t have enough money but will save towards it,” says Mellony Ramalho, African Bank’s Group Executive: Sales, Branch Network.
Although saving might not be the coolest thing to teach your kids, it’s definitely essential and they’ll thank you for it when they are older.