How to talk to your kids about the value of money

There are some topics that we as parents would rather not talk about, either out of embarrassment or because we’re afraid of saying something wrong. But as kids grow, their inquisitive little minds start to wonder, and holding off conversations around money and budgeting for too long can leave your children in the lurch later in life.

The Human Sciences Research Council’s 2017 report shows that 48% of South Africans don’t manage to save at all, with 42% reporting having no long-term savings of any kind. With so many adults unable to save, what can we do to create a better financial future for our children? We can start by talking about it.

Why is it important to talk about money?

Speaking about money and the value of saving is a taboo in many communities. Few adults do it with each other, let alone with their kids, but financial education is especially important for young people to grow up knowing the real value of money and how to control their personal finances. There are a number of ways to teach kids about how to manage money, spend responsibly and save towards long-term goals.

How do you know your child is ready to be taught about budgeting?

Ideally, once your child shows an interest in coins or banknotes, it’s a good time to start addressing the issue and explaining what money allows you to get. Below is a breakdown of some age-appropriate exercises you can do as a parent or caregiver to teach your child about the value of money.

Younger than 11: Let’s learn the value of money

A simple exercise parents can do is to give their child a piggy bank and introduce the concept of saving. You can take this exercise further by giving them three “banks”. One for spending, another for saving and a third one for sharing. Together, decide on the amount they will allocate to each container.

• Spending piggy bank – This “bank” is for minor purchases such as snacks, small toys or inexpensive app purchases that they can make on your tablet or phone.
• Saving piggy bank – These funds are for bigger-ticket purchases, such as a LEGO set, a scooter or video games. This exercise will allow them to learn about the importance of long-term or goal-orientated savings.
• Sharing piggy bank – Teaching your child about the value of sharing what they have with others is important. This “bank’s” funds can be used to help others or used for charitable efforts.

11 – 15 years: Let’s create independent thinkers who understand consequences

As your child grows into their teenage years, they start developing a sense of independence and understand long-term goal setting. Encourage them to commit to short-term and long-term goal setting by allowing your child to develop their own goals and only assist with regular check-ins to see how they are progressing towards attaining their goals. If your child doesn’t achieve their money goals, don’t try and help them. Rather teach them the joys of delayed gratification. This will also teach them why discipline and realistic goal setting is important when saving.

15 – 18 years: Let’s prepare for the real world

By now your “almost adult” should have a solid foundation of financial literacy. Encourage them to not just rely on their allowance but also to be innovative and come up with ideas for how to earn more money – babysitting, walking dogs, washing cars, covering other kids’ school books for money … the list is endless. This might also be an important time to start a conversation about how to avoid or limit the use of debt as they grow older and venture into the real world.

There are many ways to introduce the concept of saving and how important it is to set financial goals in order to encourage financial literacy from a young age.

For more information and resources you can do our Values & Money course which examines your current attitudes, behaviour and values around each of these money values: honesty in earning, responsibility in spending, self-control in saving, wisdom in borrowing and generosity in giving.