As they hit the tween years, you might find that your kids are taking more of an interest in money. But what to teach them, and when? Below are five important money lessons you can teach 10-14 year olds. If they learn these now, you’ll be helping them to establish good money habits they can use throughout their lives.
1. Teach them to recognise their money influences
There are some internal and external factors that have an impact on how we all feel about and use money. Teaching your tween to understanding these is an important part of helping them take control of their relationship with money. The first of these is your tween’s personality – some people are more impulsive and frivolous, and others are more considered and careful, which tends to be reflected in their natural use of money. Another major factor is the influence of family, friends and social media. If money is a point of stress in your house, or if you’re modelling less-than-good money behaviours, your tween will be picking up on it. Similarly, they will be influenced by how their friends or social media influencers talk about and use money. Electronic money has also changed our relationship with money as the decline of cash and the rise of cards and tap and go has made it harder to feel a connection, and easier to spend money. Teaching your tween to recognise the impact of these influences – and not be swayed by them – is their key to good money management in the future.
2. Teach them how to track their spending
One of the more common complaints I hear people make about money isn’t that they’re not earning enough but instead that they don’t know where it all goes. If your tween is starting to have access to a little money of their own, perhaps from regular pocket money, doing odd jobs around the house or neighbourhood, or working in their first casual job, you can help them avoid falling into the trap of unconscious spending by introducing the idea of a money diary. This is basically just a notebook or spreadsheet where they keep a record of what they’ve spent their money on, and how much each item cost, over a month. By consciously tracking their spending this way over several months they’ll begin to see patterns and if they want to save more, they’ll be able to identify areas to cut back on. And, at the very least, they’ll always be able to answer the question ‘where did all my money go?’
3. Teach them to understand different types of saving
When it comes to money, it’s important to know that not all savings are created equal. Up until now, you may have taught your kids that saving up is an important way of being able to buy something expensive that they really want. And while that’s true, saving up to buy something is really just delayed spending. At this age you can start to explain that there are different types of saving beyond saving to spend. Some examples might include saving just because they have extra money, saving to make more money (such as saving to invest) or, you can explain that as an adult it’s a good idea to build up some savings to have an emergency fund behind them.
4. Teach them to understand different types of debt
Just as all savings are not created equal, neither is all debt. Some debts are considered good debt while others are considered bad debt, and tweens are old enough to learn the
difference. By definition, good debt is debt that helps grow your wealth while bad debt is debt that, on balance, costs you money. But when teaching kids about complex topics, it’s always more effective to use real-life scenarios and examples. Some examples of good debt include borrowing money to buy a house (because an increase in house values should offset the ‘cost’ of the debt (the interest)) or borrowing money to pay for higher education (because having qualifications should enable them to get a higher-paying job). Bad debt includes things like spending on credit cards or using buy now pay later services, as the cost of the interest or fees will mean they end up paying more for the purchase overall.
5. Teach them what to consider when choosing financial products
Somewhere between the ages of 10 and 14 you’ll probably need to look at opening your tween a bank account with a card for day-to-day spending, a savings account, and if they enter the workforce, they may even need to look into opening an account with a super fund. Rather than taking over these tasks for them, get them to help you research financial products and teach them what to look for to find the products that are right for them. In most cases fees will be a factor as low or fee-free accounts will stop fees from eating into their money. In the case of savings accounts, interest rates will come into play and investment performance is a consideration when it comes to super. But there is one other factor that may be important to your tweens – ethics. For example, they may prefer to deal with financial services providers that put the planet and people ahead of profits. A quick online search will help you find banks that don’t do business with companies that cause environmental or social harm, such as companies that produce firearms, tobacco or fossil fuels, or that make their money from gambling or live animal exports, and ethical super funds or funds with ethical investment options.
And one lesson for parents…
Being tweens, there’s a good chance they won’t thank you for these lessons now, but as the amounts of money they’re dealing with grow and their relationship with money becomes more complicated they just might thank you for teaching them these things – one day!