How to teach your kids financial literacyPUBLISHED : | UPDATED:
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Start them early. Quentin Jones
STEP 1. Teach them about money and value from an early age. It doesn’t have to be a lesson in capitalism but more about what’s involved in acquiring things of value – show them what $2 can actually buy them.
STEP 2. When they’re a little closer to school age, let them start handling money and understanding what it does. When they can count, ask them to help with change. Coins and notes are also a great tool for teaching basic maths.
STEP 3. Once they understand the concept of money itself, saving is next on the list. This is more about deferred gratification. Try the great marshmallow experiment – would you prefer to eat one now or wait 30 minutes and get two? Help them set goals, such as a new bike, and start a plan to put a little money aside each week.
STEP 4. Start giving them pocket money, but do this at the same time as step three. You can’t save for something if you don’t have a regular income. It helps to link the money to chores, homework, etc, so your child understands its value – that is, the money is for their contribution to the family over the week.
STEP 5. Teaching how to budget is important, too, and incorporates steps four and five. A bike is probably not the only thing your child wants. They will have regular weekly expenses: sit with them and write it all down – Excel is great for this.
STEP 6. Older kids can start thinking about a part-time job. But also ask them to make a contribution to the household once they start earning an income. Maybe they could start paying their telephone bills.
STEP 7. If you have kids in their 20s or 30s living at home so they save money, it’s not too late. They might be trying to scrape up a house deposit but this doesn’t mean they can’t pay board or some percentage of the bills. Being a freeloader won’t help them when they do move out.
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Penny Pryor Smart Investor