TIPS FOR RAISING MONEY-SMART KIDS

Teaching your children money skills and budgeting from an early age will equip them with essential life skills, promote responsible decision-making and set them on a path to financial success.

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'Money doesn't grow on trees' is an expression many of us heard growing up – sometimes ad nauseum! As hard as this was to hear as a child, it's an important phrase that carries the underlying life lesson that you must be smart with money because there is a finite amount of it.

Start teaching them early
From as early as three or four, show your kids how to tell coins apart and give them a piggy bank to stash small change. It's important that you give them a tangible place to keep their money safe as they can hear, feel, and see the money accumulating. They need to understand that money doesn't fall from the sky. Once they've saved up some money, let them purchase something small. When they've accumulated enough money to buy something more expensive, such as a toy, you can demonstrate the benefit of saving.

Open a savings account
Kids from as young as eight can be taught how to manage their money and giving them access to their own debit card and bank account will give them a head start in the world of banking. All major South African banks offer savings accounts for kids under 16 (or 18) at no cost and with no monthly fee. You just need to have an account of your own for it to be linked to.

Lead by example
Children learn by observing what they see around them, so if they see you weighing things up and making responsible financial decisions, they're more likely to mirror that when they're older. Be wary of discussing serious issues with your partner or fighting about money in front of your child. Try to reframe your view of money and remind your child how it can be a tool to buy things you value, instead of a stressor.

Draw the comparison between needs and wants
When your child is a little older, try to show the difference between needs and wants. You could play a game with them when out shopping and get them to indicate which things are basic necessities and which things are luxuries. Help them understand how important it is to prioritise spending on the important stuff before treating yourself.

Encourage goal setting
If your child has been nagging you for something they want, suggest that they work towards saving up money to buy it themselves. Get them to choose a deadline for obtaining the item and, every time they reach a certain amount in savings by themselves, match it. This incentive will make them work harder at saving and help them understand that with a little discipline, they can buy themselves what they want.

Teach them about credit and debt
This is a trap that many adults find themselves in, but you can help prevent your child from getting into unnecessary debt later in life by demonstrating how credit and credit cards work, the responsibility of borrowing money and the consequences of not managing your money correctly.

Encourage them to take on odd jobs
You can instill an entrepreneurial spirit and good work ethic in your child by paying them to do certain household chores and, when they're a little older, encourage them to look for ways they can make money in the neighbourhood, such as cutting the grass or running errands for the elderly. Financial independence is a wonderful feeling and the sooner they learn to oversee their own finances, the better.