Educating our children on how to be smart with money is something we take seriously here at Somewhere Between, so we were excited to have Cath Fowler from Get Money Wise guest blog on our site. You can follow her on Facebook and her blog where she provides tools, ideas and proven strategies for both adults and children on getting wiser with their money.
Teaching Kids About Money
As a parent we all want to give our children the confidence to be independent adults. One of the areas that can often be challenging as we enter adulthood is managing our finances.
Even if teaching financial literacy in the classroom was improved in this country, this isn’t enough to set our kids up for success. I am not talking about just 'teaching kids about money'. But, specifically, how to be wise with their money.
It has been shown that the most competent money managers in their 20's were taught about money by their parents. As a result, they develop the life skills of responsibility, prioritisation and delayed gratification.
So how can you set your tween up for success?
Through practice and real life experience our tweens can learn sound financial habits
Children as young as nine can begin to understand the concept of investing and passive income. So don’t think they are too young to understand. Perhaps consider setting up a bank account and showing them the interest they earn each month. It won’t be much to start with. But they then get the connection that they can earn money on the investment without needing to actively work for it.
Provide them with the freedom to make their own choices
With younger children, to teach them the basics of money management you might be an active contributor in deciding how you split any allowance. For example, they might put 20% off their pocket money into savings, 10% into giving to others and the rest they can spend. But as your child gets older allow them some freedom to decide how they will spend their money.
Don’t judge the way they spend their money
It is almost inevitable that in the beginning your tween may spend all the money in one go. This will change as they realise they can save up for bigger ticket items. By encouraging them to start making their own decisions when it comes to finances. The money mistakes they will inevitably make, will be done with a few dollars rather than thousands down the track.
Encourage their entrepreneurial spirit
During the tween and teenage years it is a naturally curious stage so trying new things and questioning the way things are done comes rather naturally. The days of staying in a job for life are all but gone.
With our kids are being brought up in the age of disruption (think Uber) fostering their entrepreneurial spirit is becoming more important. Do this by being an encourager of their ideas.
If they want to try making their own cupcakes and selling them, or starting their own Youtube channel be an enabler who helps them do this. They potentially may failure at a new venture but you are helping them to develop perseverance and creating a chance for them to learn from their experiences.
Does your tween have an interest in learning about money management? Do they have ideas that can foster their entrepreneurial spirit?