Wealth creation starts with respect for money and respect for money starts with financial literacy. Respect for your money is being responsible with your earnings and that responsibility is vital to our success in wealth creation.O.k I went in circles there but I’m sure you get the gist. Financial literacy for kids is the ability to understand money and how it works at a young age. In this post I will be sharing with you how I am instilling this ability in my kids.
Why Financial Literacy for (my) kids
Kids have demands all the time and they expect all the to be met the moment they ask. They do not understand what money is, when they see money in the wallet they believe you have money and you can do anything you want or they want. Growing up I remember asking my mom for money to buy something and she would reply “Money does not grow on trees”. I failed to understand it then, now that I am a mommy too I understand what she meant 110%. I am tempted to reply my son the same but as a modern mommy I have chosen to take a different approach. Yes I am telling my son too “money does not grow on trees” but practically.
It is important to teach your kids about money at an early age so that they understand how things work out there. Lack of financial education leads to a life full of debt and unnecessary spending. I am trying to teach my kids to be financially independent in a way. At the end of day he will know if you do not work, you will not have money. If you spend money you need to account for it and spend it on the things you need. Another lesson I am teaching them is live within your means, and be content with what you have.
Earning his money
When my son asks for money any day, I am able to give him, but just giving it to him will not teach him anything. I strongly believe in the saying “Give a man a fish and you have fed him for a day, teach a man to fish and you have fed him for a lifetime”. I have to teach him how money is earned and that is through working. For a 7 year old I have to give age appropriate chores – besides earning the money, I am also raising a responsible man who is able to clean after himself. Currently we have 5 chores which are make bed, pack toys away after playing, tidy room, clothes in laundry, clean table after eating. For every chore completed that day you earn 1 point – which is equivalent to R1. At the end of the week we will calculate the the points earned the kaching-kaching money in the bank. We have a chart we got from Standard Bank at the Mama Magic Baby Expo. After he has mastered the chores, I will add more or change the set completely. Good behaviour earns you double bonus points.
Banking his earnings
For banking we are using a piggy bank and we use coins only. Because he is only seven I have chosen to start with a piggy bank so that he can see his money “grow” – the more you put in the more you have. Also with a piggy bank seeing is believing :-). So I always try and tell him how his piggy bank is similar to my bank account. I have also told him why I keep my money at the bank – it is safe there and if I am a good girl and I don’t use it they give me extra points for not using it. The same applies with his money if he does not use it I add extra at the end of each month. We only spend our money once a month. Once he has understood the basics of money and a bit older we will then open a bank account.
Spending his earnings
We work for money in order to spend it (responsibly of course). This is the best part of life for everyone – I would like to believe so. At the end of the month we count how much he has earned and we plan on what he needs to buy. Before we go to the mall we have to discuss our “ceiling” spending, and if we really need what we are buying, is it necessary. We will only leave until we have agreed and I have approved the purchase, for example we will not buy what we have already or age inappropriate toys or purchases. I guess you are thinking I am very strict 🙂 not at all but I have some military blood in me hahaha. I try and keep our purchases to luxuries like sunglasses, caps, toys and oh arcade games. – things that he can do without but makes him happy not necessary on my list. The happiness this spending “achievement” brings to him warms my heart.
So far so good, my son understands when I tell him i do not have money because of what I have taught him. It’s not easy for him to accept it but well he does. The future is looking bright. Next year or the year after we will open a bank account and introduce kids apps like iAllowance and a whole lot of apps that can be used . Will also try introduce entrepreneurship very soon just like my mother did to me. I started selling sweets when i was Grade 1 and until today I am still business minded to this day. (story for another day). I want him to see opportunity in everything. My aim is to raise financial illiterate kids and raise responsible man and so far it is going very well.
I hope you enjoyed this post. I am sorry for not posting often. Happy reading
Please note the post is more focused on the 7 year old than the 3 YO – you will notice the use of kids and son 🙂