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Money talks: How to introduce your children to managing their finances
1. While digitalisation is changing the world, including money and banking, the first contact your children have with money is still likely to be cash. This tangible connection helps you teach your children that if you lose it or spend it, it’s gone; collecting coins in a glass jar shows them in a very real way how money accumulates or is lost. Board games like Monopoly or Game of Life and a host of online games are also a fun way to introduce your kids to the concept.
2. Explain how credit and debit cards work and that when you pay with a card in a shop or online, even though no money appears to be changing hands, these transactions are every bit as real as payments with ‘real’ money. Talking them through the entries on a bank statement can help illustrate this. The right time to give them their own debit card varies according to the child, but an early understanding of how to use bank cards responsibly will stand them in good stead their whole lives. Talk to your bank about their account options for young people.
3. When children start to receive a weekly or monthly allowance is when they really start learning about the value of money. To help them understand that money doesn’t grow on trees and has to be earned, you might link their pocket money to helping around the house. Apps like Bankaroo and PiggyBot can help kids with budgeting and saving from the age of about seven, showing them how they’re progressing towards particular savings goals. For teenagers, find a method they’re comfortable using, whether it’s a spreadsheet, a pencil and paper, or an app like Yolt.
4. Like the rest of us, children are bombarded with highly targeted ads whenever they’re online. And from the moment minors are allowed to make payments from their own bank accounts, they are vulnerable to being lured into fraudulent schemes. On the flip side, the fact that today’s children are growing up with the internet and social media means their sense of risk is frequently better than that of older generations. Make sure they know they can come to you if they are unsure about something they’ve seen online.
5. Don’t shy away from talking openly about money in front of your children and answering their questions honestly; if you make the issue secretive, they’re less likely to feel they can talk to you about money matters in the event they find themselves in financial difficulties.
This article first appeared in ING Expat Time