As parents, money is such an important issue in our lives, it is hard to imagine a time when you didn’t have finances to think about.
And if you have children you might be wondering when you should start talking to them about money.
A report by researchers at the University of Cambridge says that children as young as three are able to start grasping financial concepts like saving and spending and that positive money habits are formed by the age of seven.
Teaching finance in a digital world
In today’s digital age, learning about money also means understanding tap-and-go payments, online shopping and in-game app purchase – none of which involves actual cash changing hands.
So this concept of saving and spending seems even harder for our children to grasp when our money is literally in thin air.
Today’s children have even become know as the “invisible money” generation.
Where do I start?
The best place to start is to go back to basics. Teach your kids to earn and save for what they really want.
You might also want to look at setting up a bank account with a debit card for them (there are specific cards that allow parents greater control for under 18s), as this will help them understand that digital money is “real” money.
Until then, here are some age-specific tips that might help you teach your children about finance.
Teach them about having to wait to buy something they really want. This can actually be a really hard concept to grasp for all ages, but it’s good to start this lesson early.
This also helps when you go into a store and your child asks for a toy, in which you typically reply, “I don’t have enough money for that”. But kids are smart, they know you can pull our your magical credit card and swipe it if you really wanted. Instead, you could respond that you are here to buy xyz and we’re not here to buy toys today.
Teach them about making choices on how to spend their money.
This is a great age to start instilling the importance of making positive choices because once you spend the money you have you don’t have any more to spend.
You can also think about engaging your children in more adult financial discussions at this age.
At this age, it’s a good time to talk about interest. For example, if you were to bank $100, you’d have $23,000 by the time you were 65.
Teaching them that the sooner you save the faster your money can grow due to compound interest. Therefore, switching the conversation from short-term goals to long-term goals.