I really wanted to do something to help children, so I recently set up a not-for-profit organisation that visits schools in my local area to teach kids about money.
One of the tools we use in our workshops is a piggy bank which has four chambers — save, spend, donate and invest. This helps teach children about money and the different ways it can be used. It's not just for buying things straight away.
Parents could also try this idea at home by labelling four glass jars and encouraging their kids to divide their pocket money into the different jars.
I've generally found children are keen to learn about money and their enthusiasm is inspiring. In our last workshop, the kids wanted to save for things like a drum set and an Xbox, but they also talked about donating to people affected by the Queensland floods.
Parents can help their kids learn responsible money habits with the following five tips:
1. Encourage goal setting: Ask your children to identify their short-term and long-term goals. For example, they may want to save for a skateboard in the short term, and a longer term goal might be saving for a car. Discuss how much each item costs, when they want to purchase them and how much they need to save each week to achieve their goals.
2. Get started as soon as you can: Start teaching kids about money as early as possible. From the age of four, they can be introduced to the simple concepts of saving and spending. When they're six years-old, start talking to them about how people need to earn money to pays for things like food, clothes and toys.
3. Teach them smart spending habits: Show your children how to shop around for the best price, especially on big ticket items, such as a bicycle or laptop. Help them check out catalogues, look for sales and do online research to ensure they're getting the best deal. Encourage them to ask for a student discount and hunt for seconds or 2-for-1 deals.
4. Establish a good money routine: Teach your kids how to set some of their money aside each week for saving, spending, donating and investing, so they develop good habits early on. Take them to the bank regularly to deposit their savings. Show them how to log on to their bank account online, so they can see their money grow.
5. Let your children pay: Don't buy your kids everything they ask for. Encourage them to save and pay for what they want with their own pocket money. This will help them learn how to manage their own bills when they leave home.
Dianne Charman is an AMP financial planner and mother of two.
Dianne Charman is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706. Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.
To find your nearest AMP financial planner visit www.amp.com.au/findaplanner.