Teach your child to be financially fit
By Khomotso Molabe | Standard Bank South Africa
With South Africa’s economy in its current precarious state, careful money management and next-stage, goals-based financial planning is more important than ever if consumers are to put themselves on the path to financial stability and prosperity. Yet, just looking at our national consumer debt and saving statistics, it’s pretty clear that many SA adults know little about this subject.
“To help the next generation avoid the mistakes of their elders, and to live financially fit lives, they need to be taught the essentials about money,” says Beth Kobliner, author of Get a Financial Life, and a member of the US President’s Advisory Council on Financial Capability who spearheaded the creation of Money as You Grow, an initiative that offers age-appropriate money lessons for children.
It’s no secret that those who are wise with their money early on grow up to be more financially savvy and able to craft their individual successes from an early age. Khomotso Molabe, Head of Digital Banking and eCommerce at Standard Bank shows you how you can teach your children to save in ways that are inclusive, simple and fun – enabling them to make their next goal or dream a reality:
- Give your children an allowance
According to experts, the best way to teach your children the value of money is to give them a little of their own to manage. “Just how much is a personal matter, as no two families are the same, each with their own individual circumstances to consider. Therefore a standard approach cannot be taken. However, the aim is to make it a regular amount, given at regular times, so your children learn to plan their spending on an ongoing basis,” advises Mr Molabe. “The fact that they now manage their own money should make them more careful about spending it, and creating a healthy respect for the value of money.”
- Turn shopping into a learning exercise
Author Beth Kobliner says that it’s important to explain to your children that money is finite, so they need to make wise choices, because once they’ve spent the money they have, they won’t have more to spend. To really drive this point home, she suggests the following while shopping with your children:
- Include your children in financial decisions: For example, tell them that you are choosing the generic, unbranded pasta because it costs R2 less and it still tastes the same.
- Talk aloud about your financial thinking: Say things such as, “Do we really need this, can we borrow it, would it cost less somewhere else?” etc.
- Needs versus wants
Parents should explain the difference between needs and wants to their children from an early age to help them make good spending choices in whatever they next hope to accomplish. “Teach your children that needs are things that your family must save and pay for, because you can’t do without them, like groceries, school fees and uniforms, and petrol,” Mr Molabe says. “Wants are things such as satellite TV, and the latest toys or electronics; these things are nice to have, but you can survive without them.”
“It is important to instil a sense of responsibility in your children, by teaching them that spending impulsively can have a knock-effect on their savings goals, i.e. spending money on the latest toy now, might take away from a bicycle, or similar, they have been savings for, for months”.
- The family’s budget is a family affair
It’s well-known that children’s attitudes to money are shaped by the way their parents talk about it and treat valuable items. “That’s why it’s important that every member of the family is involved in planning the family budget and take decisions together,” says Mr Molabe. “Parents should show responsible, careful leadership in planning the monthly family spend, but each member should have the chance to express their opinions and needs.”
- Make it fun, easy, personalised – and digital
Once you’ve decided to give your children an allowance, it is important to make finances fun and not a chore, so that it becomes a natural part of who they are. In this way they will enjoy saving and watching their money grow, and feel a sense of achievement when they gain savings.
There are many digital tools and apps that can assist parents with this, such as the Standard Bank’s Kidz Banking app. The app is the ideal additional tool to help teach children the value of money in a colourful, interactive and fun way.
“While still keeping financial control firmly in parent’s hands, the Standard Bank Kidz Banking app is a good way to pay your children their pocket money,” explains Mr Molabe. “It can be personalised to suit every family and children between 6-12 years of age. As savings are spent, debits are noted and the balance in the account is recorded, teaching the fundamental skill of money management to your children, who can access this information at any time.”
Taking the lesson further, parents can teach children to earn money by paying money into the app when allocated chores, such as cleaning their bedrooms, are completed.
“Think of it as tool for teaching your children the basics of finance while encouraging them in a way that will teach them early participation in the financial world. This will enable them to prepare for a stable financial future that will empower their journey into their next, no matter the state of the economy or size of their aspirations,” says Mr Molabe.
“When they see their money start to grow, their excitement will keep them on the path of financial security – a path that will lead them to achieving whatever their next dream, goal or ambition is.”