Money Saving for Kids

Teach them early!

Today, kids can find it difficult to understand the function of money in everyday life, when most of us use credit cards or shop online every day. To them, it’s like money has become invisible.

‘You don’t need money mum, you have that plastic card thing to buy stuff with…’.

Now more than ever, the role money plays in society, basic budgeting, saving skills and goal setting techniques, can be valuable lessons for our children so that they can mature into independent, financial savvy adults.

Here are some ideas to get your kids tuned in to the meaning of money:

1. Create a pocket money scheme. While pocket money has been around for more than a lifetime, it’s a good idea to think about some basic structure for your children. It’s important for kids to understand that earning pocket money needs to be in exchange for doing agreed tasks. As a family, set the jobs list, ensuring it is realistic and achievable, then consider adding some bonuses for efforts over and above these, much like you would see in work life. And, similarly, as children get older, consider debiting pocket money when tasks aren’t complete, or perhaps behaviour doesn’t align with expectations!
2. Set realistic savings goals. Just like adult life, working and saving has so much more purpose when there are achievable goals to strive for. Helping your children to set these goals, and develop a pathway to achieve, whether that is through charts, bank statements or money in a jar, can keep them focused along the way. Keep them engaged by applying the end of savings goals of ‘something I need’ and ‘something I want’ so that they are learning about the balance between the essentials and discretionary spending.
3. Practice setting a budget. Today with our cashless spending habits, our own budgeting rules have been stretched. We are conditioned to purchasing ‘here and now’ rather than waiting, opting to pay for items off over time. Talking to kids about budgeting can help them to understand about priorities and trade-offs. Next time you plan a family day out, be it to the movies, beach, or dinner out, practice setting a budget with the kids. Maybe that means missing out on the ice cream at lunch time so they can have dessert after dinner, it’s a valuable discussion!
4. Get involved at the supermarket. Shopping with kids is definitely an acquired taste! A supermarket trip can end up way over budget by the time you get sucked into the kid-focused advertising! An idea to control this spending activity and get the kids involved is to plan the shopping list as a family, set a budget and try to stick to a spending goal. Talking about trade-offs and how to achieve what you need with some room for treats, a valuable real-life activity!
5. Understand needs vs wants. Most children will convince you everything on their list is an essential need! Teaching kids about what is required to get through each day, breakfast, school lunch, toiletries, etc. and that these items need all to be purchased out of the family savings, can help them to understand that ‘needs’ take priority (in most cases!). There is always room to save for those special treats but the lesson of perspective can be a value learning for all!

Commonwealth Bank has some great videos and worksheets to help kids with the money discussion, definitely worth a look!