When it comes to teaching children important life lessons, parents are often very focused on educating their kids about the importance of eating their greens, crossing the road safely and ensuring that they always know to say ‘please’ and ‘thank you’. But what about the personal finance and the value of money?
Children begin to form their attitudes and money habits as early as five, and their view of money can be set by the age of seven, so mums and dads need to seize the opportunity when the kids are little to break taboos by talking about money – as attitudes to finances are often inherited.
We talk to the founder of Kids Finance Initiative, Marilyn Pinto, who throws some light about teaching kids the importance of finance early on.
Why is it important to teach children about money?
Because it’s a critical life skill. Finances are the number one concern for most adults and it’s because most adults were never taught about money – not at school, and not at home (usually). So, most adults learn about money through making expensive mistakes – not a particularly smart strategy for our children to follow. Which is why it makes sense to teach children early on about which pitfalls to avoid, how not to get into debt and what money mistakes to stay away from. Also, our children aren’t taught about money in school, not really. There isn’t a school anywhere in the world which does enough to teach children about money as financial literacy isn’t part of any usual school curriculum. There are schools that might touch on money matters, but there aren’t any that do enough. Even parents whose kids are studying finance-related subjects don’t get the education they need to manage their personal finances. Parents might think that because their kid is studying business studies or economics at school that this is covered, but it isn’t. You can go through an MBA programme, you can do a post graduate diploma in banking and finance, and you won’t know anything about how to handle your personal finances. Yes, you might know how to handle company money and how to read company balance sheets, but that is quite a long way from teaching you how to handle your own finances.
What age should parents be teaching their kids about money?
As soon your kids start saying “I want” is the right time to start talking to them about money. Kids are able to grasp the concept of money and to form their values about money around the age of seven, so that is a really good time to start talking about it. Also, the earlier we start talking to and teaching our kids about money, the more practice they have and the more acclimatised they get to the concept. Plus, we are more able to influence their mindset at this age. We do classes for kids between eight and 12, and other classes for teens. It’s so much easier to teach the younger kids because their mindset hasn’t been formed yet and their values haven’t been formed. We are able to influence and mould them better. With the teenagers we have to do a lot of unlearning, before they can actually start learning. So, I think that’s quite key, to start early. But that said, it’s certainly never too late to start. If you have an older child who has not had a course in financial education, alarm bells should start going off in your head, because while it is really important for young kids to learn about money, for older kids it becomes critical. Older kids are getting ready to go off to college or university and will be making financial decisions on their own. That means, if they haven’t been taught about money then they are essentially going to head off on their own with zero training – that is a recipe for disaster.
How can parents make sure their children appreciate the value of the things they want?
I think this comes down to actually moulding and developing your child’s money mindset. The typical mistake that most parents make is to focus on the practical element, which is allowances and credit cards, but we forget to focus on the strategy. What we do in our programme is that we actually talk about the mindset, we talk about strategy. Once the kids have the right mindset about money then we can get them to appreciate the value of it. Then getting them to figure out whether they want something or need something becomes a piece of cake. So, the number one thing to do with kids is to make sure that they understand what a proper money mindset is in terms of taking away the negative associations and making sure they have a positive psychology towards money. We also need to make sure that they don’t have any limiting beliefs, which we as parents tend to get from our own parents. So, talking to
kids about money and making sure we mould their money mindset properly is of utmost importance.
How should a parent approach a conversation about personal finance with their kids?
To be honest, kids tend not to listen to their own parents. This is mainly because we are telling them so many other things to do and not do during the day – like tidying up their rooms, eating their greens and doing their homework – so being careful about money is just one of the many instructions that we are hurling at them during the course of the day. So, they are not sure how much attention they should be paying to that particular instruction. That’s why I really would sugestt getting your kids an education in finance from an institution or individual who has been trained to actually teach finance. Just like you wouldn’t teach your kids to drive – because even though you know how to drive, you aren’t sure you’re necessarily doing everything exactly right and you don’t want to take any chances with your kids. You only get very few chances to mould your kids money behavior and to mould their money mindset, to teach them things about money that they need to carry on for the rest of their lives. So, I really would suggest leaving this to the professionals. That said, there are very important things that parents should be doing as well to compliment that.
Should parents be giving their children an allowance?
A lot of parents are concerned about giving their children an allowance, should they or shouldn’t they? And also how much they should be giving? For me, I really would say give your kids an allowance once you’ve given them some financial education even if you make it a condition and tell them they can have an allowance once they’ve undertaken a course in financial literacy. Just like you wouldn’t give your kids the keys to a car if they haven’t had a driving lesson, why should you give them money when they haven’t taken a class in learning how to handle it smartly and responsibly? That said, the research on allowance is all over the map and there isn’t any evidence to show one way or another whether giving them an allowance actually helps. So, for parents who aren’t doing it, it’s not a deal breaker, but it is a great way to get kids to be a little more responsible and to actually be able to handle money themselves. When parents are giving their kids an allowance, there are a few things to bear in mind. Firstly, be very clear about what the money is for, as in what it can and can’t be used for. And secondly, use cash as it becomes a lot more tangible. Kids are used to not seeing cash because we all use credit cards meaning it is difficult for kids to grasp cash as tangible concept. By giving them cash, it makes it so much more tangible. Once they have had their allowance, and have had a little bit of an education in the financial field, then step back and relinquish control a bit, as this is what it’s all about. You should think of an allowance as learning money and they should understand that is what you are doing as well. That means that even if they are buying something you think is a silly purchase that they perhaps shouldn’t be spending their money on, then you have to leave them to make that mistake and give them the final say on what they are spending their money on. Obviously if that goes on, and they keep making mistakes, then there are other steps that need to be taken. Also, be consistent. Most parents tend to start off with grandiose plans of giving the kids an allowance every week and then a couple of weeks down the line we forget and then we start all over again. We need to be consistent and clear with what they are going to get and when they are going to get it.
How do kids respond to learning about finance?
Kids love learning about money. It gives them a sense of control and builds up their self-confidence because everything they learn about, they can see and put into practice in real life. They feel more competent in that particular area and that is possibly one of the nicest things to see in kids when they have that self-confidence and belief in how
money works.
What about parents who don’t necessarily feel qualified to educate their kids about money?
The one things that parents can do is to start a conversation with their kids about money. Not many do because we weren’t really formally schooled in money either and aren’t sure we are doing the right thing. And for some parents if they know they are in debt or aren’t handling money themselves very well, then they don’t feel competent enough or qualified enough to talk to their kids about money. And that in itself is a big mistake because every parent has huge amounts of value that they can give their kids by talking to them about the financial decisions we make. And I don’t just mean talking about good decisions, kids can learn from bad decisions too. Our kids have a lot to learn from those scenarios too. In class, we always talk about OPE which is ‘other people’s experiences.’ Kids can learn from their parents’ experiences and learning about those gives them a heads up over anything and can help them know which mistakes to avoid. That said, when I say talk to your kids, I don’t mean lecture them. When parents sit their children down and say ‘right, let’s talk about money…’ kids tend to switch off. So that’s something we need to stay away from. In the current circumstances it’s important to note that a lot of people are stressed about money at the moment with the pandemic having hit almost every family financially in one way or another. When we are talking to our kids about money we need to make sure our script isn’t anxiety-ridden as this will just worry them and there isn’t anything they can do to help so it makes them stressed with no actual outlet for that. What we need to do is be careful that our script is more thoughtful, rather than anxiety-ridden.
Age appropriate chores for kiddos
When it comes to chores, it’s important to give children the responsibility to help around the house from an early age. But there are things that little ones will struggle with – and ultimately will need mums and dads to step in and help or redo anyway – so make sure they you give them age-appropriate tasks to instill confidence in them and to ensure they aren’t creating double the work!
Toddlers two to three
Toddlers LOVE to help around the house. A mistake parents often make is to not let their littlest children help. At this age, they don’t even think of it as work, it’s fun. A child who gets in the habit of helping at such a young age will be more willing to help as they
get older.
• Pick up/ put away toys
• Unload the dishwasher (silverware, plastic cups, tupperware)
• Dust with a feather duster or microfiber rag
• Swiffer the floor
• Put clothes in the dirty clothes hamper
• Collect dirty clothes
• Help get clothes from washer to dryer
• Put clothes away
• Make bed (put pillows and blankets on the bed, not bootcamp style)
• Wipe cabinets
• Wipe baseboards (soapy water)
Preschoolers four to five
Preschool children love charts and stickers so using these is a great way to motivate them to help and to reward them. Some preschoolers have better gross motor skills than others so just because one of your children could vacuum at age five doesn’t mean they all can.
• Any toddler chores
• Load the dishwasher
• Vacuum couch/ chairs/ cushions
• Take out recycling
• Set table
• Clear table
• Wash dishes (with supervision)
• Clean windows
• Wipe out bathroom sinks (baby wipes work great for this chore!)
• Match socks
• Fold dish towels
• Weed
Kids six to eight
At this age children are more likely to resist doing chores than when they’re younger.
A good way to encourage them is to say no television or games until theyre chorse are done.
• Any toddler and preschool chores
• Meal prep (wash produce, find ingredients, simple cutting with butter knife)
• Wipe bathroom sinks, counters, toilets
• Hang laundry
• Sweep
• Vacuum
• Collect garbage
• Get mail
• Fold/hang laundry
• Clean microwave
• Rake leaves
Tweens nine to 12
If you haven’t implemented chores until this age then you might be met with some resistance. Kids heading into the tween years might be upset that you are asking them to do more than they are used to doing. But you, as the parent, ate in charge so it’s important to explain to them that they need to contribute. If they are busy with after school activities and homework during the week, give them chores to do at the weekend.
• Any previous chores
• Make meals
• Take garbage/ recycling to the curb
• Wash/ dry clothes
• Clean toilets
• Mop floors
• Vacuum out cars
Teens 13-14
Kids this age have a lot going on socially and personally. Even if your child is extremely busy (or moody) it’s important to give them some household responsibilities.
• Clean tub/ shower
• Make full meals/ meal plan
• Clean out fridge/ freezer
• Mow yard
• Wash car
• Supervise younger children’s chores
Older kids 15-18
Hopefully by the time children reach this age they have the ability to do all age appropriate chores around the house. While they may resist, they should be more than capable to be a huge help around the house.
Adult children
Conversations about money don’t stop when children become adults. Whether they’re still living with you or have their own place but are struggling to save for a first mortgage or pay off credit card debts, money is a topic that often needs revisiting. For more about how to talk to adult children about money, including how to ask them to contribute to household expenses.
