Use shopping trips to teach kids about money

The one lesson your kids won’t get in the classroom is arguably one of the most important for their future success: how to smartly and responsibly handle money.

Here are my top two tips for teaching children personal finance skills.

Talk to them

Explain why you work: to make money that pays for the house, car(s), food and their school fees.

When you’re out with your children, bring their attention to people working all around them. Children need to understand the trade-offs of time needed to earn money and time for having fun.

Once they have a grip on understanding this trade-off, include them in spending decisions at a young age.

Show them there’s a charge to attend their activities and gain their commitment that they attend every class.

At the grocery store, let them see the prices for competing items and allow them to select an alternative.

Teach them about store brand pricing versus brand names they see advertised.

Talk with them about what sales mean, and show them that one-week one product may be a bargain and the next week another.

On the way home, make it fun: offer to take them for a treat with the money you saved by being a smart shopper, or better yet, ask them if you should save that money.

Pay them

Give them a small allowance for household tasks. Young children can complete routine tasks like sorting clean cutlery, doing chores or putting their toys away. It helps them feel like a part of the team, and paying for their work creates a reward and incentive system. Ask them how they want to use their money: spend it, save it, or help someone less fortunate with it?

Paying children an allowance is one of the best ways for them to learn how to handle money on their own. It encourages them to continually plan ahead and it’s an opportunity to reflect about the consequences after spending money. For example, “am I happy with what I bought? Now I don’t have enough money to buy this other thing. Maybe I should have done something differently”.

It gives them practise in making decisions and choices and experiencing consequences.

Wealth creation is about discipline and time. Financial literacy can be learned at any age, but the earlier we start teaching our kids, the better prepared they’ll be for adulthood.

Mduduzi Luthuli is a director at Luthuli Capital

A lesson your kids won’t get in the classroom .