How to raise a money smart child

You don’t have to be War­ren Buf­fet to raise a money savvy child, but it does help to start lay­ing the foun­da­tions now

Your Baby & Toddler - - Front Page - By Tracey Hawthorne

Suc­ceed­ing in to­day’s world isn’t easy: most peo­ple have to work hard, live within their means, and reg­u­larly put money away to achieve their dreams of ed­u­ca­tion or prop­erty own­er­ship. And th­ese are life skills that you should try to teach your kids as early as pos­si­ble. “Teach­ing money man­age­ment to young chil­dren isn’t easy,” con­cedes Dr Linda Jairam, an ed­u­ca­tional psy­chol­o­gist, lec­turer and re­searcher. “But it pays big div­i­dends later in life.”

MONKEY SEE, MONKEY DO

As with most things, you are your child’s big­gest role model when it comes to fi­nan­cial savvy. “Chil­dren watch their par­ents care­fully and in­stinc­tively im­i­tate their be­hav­iour,” says Linda. “They in­stantly dis­cern the gap be­tween what their par­ents say and what they do, and of the two op­tions, chil­dren usu­ally iden­tify with their par­ents’ be­hav­iour and ig­nore their empty in­struc­tions.”

So the best way to build fi­nan­cial wis­dom in your chil­dren is for you to model it per­son­ally, ev­ery day, in lit­tle or­di­nary ways.

WHAT IS MONEY?

“One of the first con­cepts chil­dren need to learn is money recog­ni­tion,” says early child­hood devel­op­ment spe­cial­ist Gill Naeser. “All chil­dren are fas­ci­nated with money, and will play with it if given the op­por­tu­nity.” She ad­vises giv­ing your (older) child some loose coins to play with and ex­am­ine (never give loose coins to in­fants). “Look at and dis­cuss the coins with your child. Talk about their size and colour, and the pic­tures on them.” As your child gets older, you can begin teach­ing him about the ac­tual value of the coins.

You can also use real world ex­pe­ri­ence as a teach­ing tool. Si­nenhlanhla Nzama, an in­vest­ment mar­ket­ing ac­tu­ary at Old Mu­tual, ad­vises tak­ing your kids with you to the bank once in a while so they get some idea of how money works.

MAKE IT A GAME

Play­ing “shop” goes a long way to teach­ing chil­dren ba­sic

money skills. Cre­ate your own game by mak­ing play money from craft pa­per and us­ing bot­tle tops or but­tons as coins (dif­fer­ent colours can rep­re­sent the dif­fer­ent amounts – just keep an eye on your lit­tle one to pre­vent chok­ing). Save empty car­tons, boxes and plas­tic bot­tles, and write prices on them.

“In­vite some your child’s friends around. One can act as the shop­keeper and the other chil­dren the cus­tomers, and th­ese roles can change dur­ing the course of play,” says Gill. “If you’re not able to or­gan­ise a play­date for the shop, let the child use dolls and fluffy toys, and then you or her other care­givers can also play along.” For older chil­dren you can get a bit more in-depth. “Have a look at games you can buy, such as a puz­zle that teaches about money mat­ters in a fun way,” says Si­nenhlanhla.

Is It a want or a need?

Help­ing your child to un­der­stand the dif­fer­ence be­tween a need – an es­sen­tial item such as healthy food – and a want – a luxury item such as sweets or ex­pen­sive toys – is one of the most im­por­tant early lessons you can teach her, says Si­nenhlanhla.

Gill sug­gests that one way to do this is to make a list of the es­sen­tial items needed for your house­hold be­fore you go shop­ping, and run through it with your child. Then, when you’re at the shops and your child asks for some­thing, check with her if it’s on the shop­ping list. If it’s not, ex­plain that it is ac­tu­ally not some­thing you (as a house­hold) need.

An­other ver­sion of this is tak­ing your child toy shop­ping with her own sav­ings. When she chooses the toy she wants say, “Let’s see if you have enough money?” If she doesn’t, she’ll need to de­cide whether to buy some­thing cheaper or carry on sav­ing un­til she has enough for the toy she wants.

worth the wait

“De­layed grat­i­fi­ca­tion is the key to fi­nan­cial ma­tu­rity – but chil­dren be­tween 15 and 36 months of age don’t want to be in­hib­ited in any man­ner,” Linda points out. This can be a par­tic­u­larly tough one when try­ing to avoid a to­tal tod­dler melt­down at the gro­cery store means buy­ing her some­thing – and this quickly be­comes a habit. But it can also be a teach­ing op­por­tu­nity: ex­plain to your child that you won’t buy her some­thing ev­ery time you go shop­ping, and in­stead sug­gest that she puts the things she wants on a birth­day or hol­i­day wish list.

Link­ing a “no” to­day to a “yes” to­mor­row can also help, like re­fus­ing to buy a toy your child wants dur­ing a shop­ping trip to­day, but re­mind­ing her that you’ll be tak­ing her to the fun fair on the week­end.

Let them Learn from their own money mis­takes

If your child spends all his pocket money in one go on sweets, she’ll have no money left for the rest of that week. And if the toy she in­sists on buy­ing breaks, or turns out to be less fun than it looked in the ads, even­tu­ally she’ll learn to make bet­ter choices even when you’re not there to give ad­vice.

show them that work Is re­ward­ing

Even if your child is too young to un­der­stand the con­cept of money, she’ll quickly grasp the no­tion of do­ing some­thing in or­der to earn some­thing else. This can be as sim­ple as “work­ing” to­wards a movie she wants to watch, a favourite meal or a fam­ily ac­tiv­ity. “Ex­pose your chil­dren to lit­tle ageap­pro­pri­ate re­spon­si­bil­i­ties and work,” ad­vises Linda. So if she helps with a house­hold chore or puts away her toys, re­ward her. “De­scribe the work you do to earn money to your child,” says Gill. “And when you’re out with your child, look at what peo­ple are do­ing to earn money, such as the shop­keeper, the teacher, the taxi driver, the doc­tor.”

han­dling money cor­rectly Is a re­spon­si­bil­ity

Re­quir­ing a child to say “please” and “thank you” is a way of re­mind­ing her that de­spite what she may see, we don’t live in a “gimme-gimme” world. Teach­ing her about money works on much the same prin­ci­ple. “Even though you work for your chil­dren and give to them, your kids must as­sume a few at­ti­tu­di­nal re­spon­si­bil­i­ties in re­turn,” says Linda. And lastly, treat the moola with re­spect. “Re­mind your chil­dren that money should al­ways be put away and not be left ly­ing around the house,” adds Gill. yb

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