In today’s cashless society it’s hard for children to understand the value of money and more importantly for them to understand that there’s not a never-ending supply of it. This is especially prevalent at Christmas time when there are many conversations taking place about presents!
Tip #1 – Teach your kids the value of money
To teach your kids the value of money they need to learn where money comes from, how you get money, that there is a limited supply and you do have to pay back anything you purchase with your card. Take a read or our blog about credit cards here.
We encourage you to talk to your kids about how you earn your money. Instead of focusing on the dollar value, focus on how much effort needs to be exchanged to purchased the object. For example, your children might earn $1 for good things they do which might include chores or good behaviours. This helps them to see that 5 chores or good deeds need to be exchanged in order to receive a $5 object.
You children will understand how much effort they need to exert to be able to afford the toy that they want. Then they can decide if they are willing to put in that effort to earn the money that is required or perhaps really, they don’t need the toy. This is going to help them to psychologically understand how much effort and money they must give up in return to get the goods they’re purchasing.
With younger kids’ money jars are a great idea where you’re using coins. Then as the kids get older encourage them to get a job and a bank account so that they can start doing the same sort of thing but using money from a bank. Therefore, helping them to learn the value of time and the value of money.
Tip #2 – Have a pre-Christmas clean up
Cleaning up pre-loved toys and making room for new ones can encourage your child to be entrepreneurial. You could consider holding a garage sale where you children select toys which they would like to sell and make money for themselves. This is an important skill.
Having your children think about generating extra revenue themselves helps to shift their perception of money as an entitlement, to money being something they can get at any time as long as they’re willing to work for it. this is a really good way of helping them to understand that they can be in control of their financial future and they can make their lifestyle and dreams come true as an adult.
It’s also important for children to think about how they can add value to someone else’s life. Either by doing chores for someone else in exchange for money, or perhaps they could consider donating their pre-loved toys.
Tip #3 – Teach them that personal value is more important than dollar value
Often homemade and handmade gifts are more appreciated and loved than a gift purchased with money. Perhaps you could encourage your children to get creative and make Christmas cards or Christmas tree ornaments to give to loved ones. Or they could get in touch with their inner chef and with your supervision make some biscuits to wrap up with some Christmas ribbon.
Tip #4 – Make a list and check it twice
It’s important to know the who, what, where! Who do you need to buy for? What are you going to buy them? Where can you get it for the best price? Having a list before you hit the shops, means that you won’t get distracted and end up spending money where you shouldn’t have! Once you make a list, do some research to make sure that you are paying a good price for the items you are looking to purchase.
Tip #5 – Have a plan for your kids Christmas money
Australians have a bad habit of spending more money than we make. So, it’s important to teach your kids to save. Encourage them to save a set percentage of the money they earn from chores or working as they get older.
This means they get into the habit and routine of saving a set percentage of whatever income they receive, putting it aside for something in the future. It’s also a good idea to start helping them to learn how to save for bigger purchases that they want. For example, if there’s something more expensive that they want, encourage them to save and then contribute some of their own money towards the purchase.
Finally, it’s important that you lead by example.
You are your child’s biggest financial influence. They’re going to watch how you manage money, your relationship with money, how you feel about money, your money habits and they’re likely to adopt those habits and adopt that approach to money as an adult.
Look at your own habits and your own relationship with money. If you feel it needs improving, then perhaps you should work on improving your money management skills. Consider getting a money mentor or financial planner that can help you so that you can be the role model that you want to be for your children. Click here to learn more about the Rise High Money Mentoring Program.
If you do go on a journey of improving your own money management skills then take your children on the journey with you so they can understand why it’s important to have really solid money management habits and be responsible when it comes to money management.