Teaching your children to manage money is an investment in their future Knowledge is power

Moeshfieka gives these tips for raising money-wise children:
• Teach children the importance of having a budget when they are young.
• Take them along to banks and financial institutions so that they become familiar with them.
• Teach them about setting goals with their money – be it to buy a skateboard, new shoes or to have pocket money for a camping trip with their friends.Says Moeshfieka: ‘Our education system does not adequately, if at all, teach our kids about the importance of knowing money matters. Make it one of their rights and one of your responsibilities.’

If you’ve ever been in a financial pinch, you’ll know it’s the type of stress you would like to save your children from one day. Had you been properly educated about money matters, chances are you wouldn’t have ended up in such a scenario in the first place.

Moeshfieka Botha, media and communications manager of debt counselling firm Credit Matters, says children do not need to know what parents make or owe, but they do need a general understanding of the incomes and expenses of the household. ‘Teach your children the difference between a want and a need. This will later lead to knowing the difference between a luxury and a necessity, something many adults have difficulty distinguishing between.’

She recommends starting off by teaching children about the different types of money:

• Money on hand for daily needs.
• Money on standby for emergencies.
• Money being put aside for future use or the purchase of a big budget item.
• Money that gets invested in policies, such as your pension or education policy.

Paul Richard, executive director of the Institute of Consumer Financial Education (ICFE) in the US, gives this advice on the organisation’s website*:

• Introduce children to money at a very young age and set an example of how to work with it.‘Children are not born with “money sense”. They learn by what they see, hear and experience,’ Moeshfieka adds.
• Constantly communicate with your children as they get older about the value of money, how to save it, make it grow and spend it wisely. ‘They need to have money of their own to learn to manage it. Giving a child an allowance is much better than simply giving a child money when he or she asks for it,’ says Moeshfieka.
• When giving a child an allowance, do so in denominations. For example, if they get R100 per month, give them ten R10 notes and encourage them to save at least one of those notes. Saving is a habit and will be of great benefit to the child if they develop this habit at an early age. ‘Teaching them to save instead of spending everything will help them in the future,’ says Moeshfieka.
• Encourage your children to keep receipts of all their purchases and then make notes at the end of the month so they can see how their money was spent.
• Take your children to the store with you and teach them how to make price comparisons and how to check for quality and value.
• Explain to children how credit cards work by teaching them about interest. This is a very tempting spending tool and they should know the risks for when they get their own.

Moeshfieka however warns against using money as a reward, such as for good grades or doing household tasks. ‘If money is used in this manner, a child will get the idea that every-one and everything has a price. Money is a huge and essential part of our everyday life, but should never be used to buy love or be a substi-tute for companionship.’
*financial-education-icfe.org

Useful contact
Credit Matters
0860 111 6197
www.creditmatters.co.za