Healthy financial habits for kids

Some important lessons are best learned from mum and dad.

We all want the best for our children and encouraging youngsters to develop a sensible approach to money matters and establish good financial habits that last a lifetime.

Start early

If you believe money is a topic best left until children are in their teens, think again. Kids can pick up valuable financial skills at a surprisingly early age. In fact, research from Cambridge University found children’s basic money habits can be established by age seven.

The study confirmed that children amass an astonishingly large bank of knowledge about the world around them by the time they start school. Much of this is achieved through what experts call ‘inductive’ learning – in other words learning by example. And when it comes to lessons about money management, it’s typically mum and dad who provide the strongest examples.

Mum and dad lead by example

It may be a scary thought but every time we impulse buy, overspend, or skip a bill, our kids are taking it all in.

However with a few simple steps it’s possible to set a shining example for your children and nurture the foundations of good money management.

Money lessons out shopping

A trip to the shops can provide plenty of opportunities for informal money lessons. Invite your children to help you draft a shopping list – it’s a great way to discuss needs versus wants. When you’re at the supermarket, explain to your child how you compare prices to find the best value.

Let children handle real cash

Importantly, give your children an opportunity to test what they have learned. In today’s electronic age, it’s easy for children to assume that money is freely available with the swipe of a plastic card. Allowing your child to use real cash – coins and notes, to make a few purchases of their own provides simple lessons about handling money.

Pocket money can encourage valuable skills

Paying pocket money can be another option to encourage healthy financial skills, and many parents offer pocket money in return for a few age appropriate household chores. This can build awareness that our money must be earned.

In case you’re not sure how much to pay, an industry survey found 7-10 year olds earn pocket money averaging around $8.50 per week rising to $14.30 for 11-14 year olds.

It’s also a good idea to open a junior savings account for your son or daughter. Encourage your child to make regular deposits and let them check the balance often to enjoy watching their pint-sized nest egg grow.

Developing a strong savings habit can hold your children in good stead throughout their adult life so consider chipping in some additional cash when your child has reached a particular savings milestone.

 

For more advice on good financial habits at any age, call ME on 13 15 63 or visit mebank.com.au.

 

Members Equity Bank Ltd ABN 56 070 887 679 AFSL and Australian Credit Licence 229500

This content was provided by Members Equity Bank. The views expressed are not necessarily those of First Super. First Super has shares in Members Equity Bank.