When you become a parent, you take on the responsibility of not only supporting and protecting your child, but also raising them to one day be self-sufficient, responsible for supporting and protecting themselves. This is best done by instilling age-appropriate life skills and values that will equip them for each stage of life and ease their transition into adulthood.

 

Priya Naicker, Head of Strategic Retail Marketing at Old Mutual Personal Finance, says that financial responsibility should form a key component of this ongoing life education. “As parents, we tend to be quick to build our children’s social, academic and extra-curricular skills, but at best we see money management skills as a lesson to be saved for a later day or at worst hope it will be picked up at the University of Life.

 

“The reality, however, is that children are far more capable than we, as parents, often give them credit for, and by delaying the introduction of money management, we are actually delaying their sense of financial savvy,” she says.

 

Naicker believes the sooner you start, the better. “From as early as a child’s toddler years, parents can begin introducing the concept of exchanging money for goods or services. Use play scenarios to get the messages across, and look out for educational shows online.”

 

According to Naicker, you can expand on these games until you feel your child has a grip on the concept of money, which Naicker says signals that your child is ready to learn the management of pocket money. “Children as young as four or five years should begin receiving an allowance, which they can use to save up for a toy or treat, to encourage an understanding of the cost of immediate and future gratification..

 

“To teach them the value of work and accountability, you can link this allowance to accountability for household tasks or activities,” she adds.

 

From about eight years of age, you can introduce children to the basics of household budgeting.

 

“Explain the difference between income and payments, and get them used to the idea of apportioning their spend according to their ‘earnings’. The concept of saving is also important. Give them a piggy bank (physical or virtual) so they can deposit part of their pocket money, and watch it grow over time.

 

“Later, as teenagers, when they begin to seek more independence, you can gradually introduce additional financial responsibilities, such as paying for their own clothing and entertainment. This should help them differentiate between their ‘wants’ and ‘needs’, and give them a sense of financial confidence in their ability to make the right decisions,” she explains.

 

Above all, Naicker highlights that when it comes to teaching children about financial responsibility, actions speak louder than words. “Regardless of what you discuss with your child, as a parent, it is your attitude and behaviour towards your finances that will likely play the biggest role in shaping their approach towards money.

 

“So next time you’re planning your household budget or reviewing your short and long-term financial goals, allow your child to get involved and then show them how you are taking the necessary steps to reach these financial goals, so that they learn to take similar steps for their future,” she concludes.

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