By Helen Baker.
Between homework, sports, music lessons and birthday parties, families have so much on their plates that sometimes it's hard to carve out time for important conversations, but we need to make time.
Just as our kids need to know about stranger danger, safe driving and safe sex, they need to know about money – where it comes from, how it works and how to use it wisely.
While many parents are more uncomfortable talking about money with their children than talking about sex (truly!), doing so will help your children flourish financially in adulthood.
You'll find five things you can do to teach your kids about the value of money below.
1. Make believe
We all know how important play – and particularly roleplay – is in kids' development.
Children can grasp basic money concepts by the time they reach pre-school and by age seven, many have started to develop their own money habits. Therefore, it's vital that money forms part of your child's imaginative play.
I loved playing shop when I was young. I had a toy cash register, play money and pretend products on the shelves. Customers (my teddy, dolls and my brother) would come and shop. Money play helps kids understand the basics of using money in a fun and accessible way.
2. Get kids involved in grocery shopping
Next time you notice that small hand tugging on your shirt sleeve, asking, "Can I have this?" in the middle of the snack food aisle, try to think of it as an educational opportunity.
Give older kids some money (say $10) and a few items on the shopping list and tell them you'll meet them on the other side of the check-out. They get to search for products, add up the amounts and shop within their budget.
Be firm about the budget, then shower them with praise for their efforts. Learning to stick to a budget is a crucial lesson when it comes to responsible spending. Develop these habits early and your kids will make better spending choices as adults.
3. Talk about where money comes form
The old saying "money doesn't grow on trees" is as meaningful as ever in the technological age.
With most of us using a plastic card (or a phone or watch) for our purchases and paying bills online, kids could be forgiven for thinking money is ubiquitous and never runs out. When you go to an ATM, talk to your kids about what you're actually doing.
Explain that the money you're withdrawing belongs to you, and you earned it by going to work and doing a good job. Consider linking pocket money to helping around the house to help reinforce the idea that you don't get money for nothing.
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4. Make it tactile
To really appreciate the value of money, it helps to hold the notes and coins in your hands. Give your kids pocket money in cash. When they spend it, they'll see it disappearing and when it's gone, it's gone. They'll have to wait until 'payday' for it to be replenished or do some 'overtime' (extra chores!) to earn a bit more.
Consider setting up money jars to segregate spending, short term saving, gifting and investing (long term saving). This helps kids see money can be split rather than a single piggy bank which gets emptied whenever a big purchase is made.
Spending your every last cent on something you want and forgetting to budget for other things isn't a wise idea. Let your kids discover this while the stakes are low.
5. Teach them patience
The Rolling Stones famously sang, "You can't always get what you want," and the earlier kids learn this lesson the better. Sometimes, we see something we want but we don't have enough money for it, and saving up takes time.
Kids need to get used to delayed gratification or they risk getting into financial trouble as adults. Encourage your children to save towards something they want. Make a chart to help them see their progress. When they reach their goal, celebrate as a family.
Family life is hectic, but teaching your kids about money doesn't have to be hard. By making money discussions part of your everyday routine, your kids will learn valuable life skills that will serve them well into adulthood.
Helen Baker is a licenced Australian financial adviser and author of two books: One Your Own Two Feet – Steady Steps to Women's Financial Independence and On Your Own Two Feet Divorce – Your Survive and Thrive Financial Guide.