The end of school. Time for a lesson.
The value of money can be a difficult thing for children to grasp. Fennell West’s RYAN SEALEY shares a few ways of helping kids to understand the concept of saving and spending
Regardless of their age, it seems every kid I come across has one thing on their mind right now. The end of the school year.
It’s a mix of exhaustion from a year of lessons and the anticipation and excitement for the coming summer holidays.
It is also a time when kids also seem to be dripping with cash. A generous grandparent here, an aunty there, and in a couple of days around Christmas, kids look like they were on to Apple shares early.
We certainly don’t want to suck all the fun out of being a kid, but summer is the perfect time to sneak in a couple of small lessons that could be as valuable as anything they learnt at school through the year.
I’ve come up with three simple concepts that could set kids on a path to being financially fit for the rest of their lives.
Not every dollar is the same
With the Christmas haul burning a hole in their pocket, lots of kids will be tempted to get rid of it as a matter of urgency.
The most fundamental lesson you can teach your kids is that not every dollar should be treated the same. Some are for spending and some are for saving.
In my view, this should be a non-negotiable rule that kids learn and practice. There are lots of very good reasons that explain why this is good practice. But mandating it will, over time, show them the importance and power of saving in a way that will stick.
A little bit often adds up
With a bit of savings under their belt, being able to build on that and see it grow is an amazingly valuable lesson.
The long holiday often gives kids a lot of a spare time. Having them to do some jobs for a little bit of extra money will show them that their savings can grow pretty quickly into something substantial and worth valuing.
Depriving them of some well-earned retail therapy and putting them on the tools doesn’t sound like it would make for a tonne of holiday fun. But you might be surprised by how much satisfaction and sense of accomplishment they’ll get from watching their little fortune grow.
Talk about it
Apart from teaching kids about the most basic truths about money – that work and saving are critical, the other important concept is talking about it.
Firstly, a regular conversation about money will reiterate to kids just how far they’ve come in a short time. A weekly review of their savings will cement that real sense of accomplishment that comes with seeing their savings grow. Secondly, kids know that things that are discussed regularly are important. Talking about money and savings highlights that it should be managed with some consideration and care.
Finally, being comfortable discussing your finances is enormously beneficial. Too many adults miss opportunities or get further into trouble simply because they are uncomfortable talking about financial matters.
Teaching our kids about money early, and making it an open conversation, could set them on the right path for life.
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Ryan Fennell, Shane West and Jarrod Owen of The Fennell West Unit Trust trading as Fennell West are Authorised Representative(s) of GWM Adviser Services Limited ABN 96 002 071 749, an Australian Financial Services Licensee, Registered office at 105 –153 Miller St North Sydney NSW 2060 and a member of the National Australia group of companies. Licensee No. 230692. Any advice in this article is of a general nature only and has not been tailored to your personal circumstances. Before acting on this advice, you should consider whether it is appropriate having regards to your personal objectives, financial situation and needs.