A peanut butter jar made into a money box with coins and notes in it

How to teach your kids good money habits

With millions of South African learners back at school, one of the biggest lessons they need to learn in life to help them succeed is financial literacy, which needs to be first taught from home, says Stian de Witt, executive head of Financial Planning at NMG Benefits.

A Cambridge University study suggests that by age 7, children are able to develop a basic understanding of financial behaviours they may need in their adult life.

“Building a strong financial foundation from a young age is critical. Even legendary investor Warren Buffett credits the early money lessons his parents taught him that helped set him up for success. That’s why it’s so important that we help our kids build a healthy relationship with money from an early age,” says De Witt.

It’s never too early to start

Talking openly about money matters with your children will build their financial awareness. Include your children from a young age in conversations about your monthly budget, income and expenses. Show them how to prepare a budget. Get them to calculate the tip on a restaurant bill. Get them involved in choosing the best grocery items based on cost and quality. “These may seem like trivial tasks, but they all help make a child financially savvy from an early age.”

Teach your children to budget

Help your children set up a simple age-appropriate budget: maybe one-third for spending, one-third for saving and one-third for giving, for example. Or open a savings account for them and deposit a portion of their pocket money into it every month. “When they start to see their money grow, they will start understanding the value of saving, compound interest and budgeting,” says De Witt.

Set a good example

It’s not enough to simply teach your children about money: their biggest influence is the way you discuss and handle money around them. “Children learn by watching you. It’s no use teaching them to budget the one day and then going on a shopping spree the next. You have to show them what good financial habits look like.”

Help your children earn money

Don’t just give your kids pocket money without requiring them to do something for it. The sooner they learn how hard it is to earn money, the sooner they will learn to be financially independent. Get them to wash the car or rake the lawn. And if they only complete two out of three chores, only pay them two-thirds of their pocket money – and explain why you’re cutting their pocket money.

For older children, packing grocery bags or working as a teller or a waiter doesn’t just teach money lessons. It teaches how to take instructions, work with others and handle workplace stress.

“Educating your children about money takes time – but it will instil good habits that will serve them well for the rest of their lives,” concludes De Witt.

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