teaching your kids about money

There is plenty of talk at the moment about educating kids about money and good saving habits. Financial Counsellor Scott Pape (also known as the Barefoot Investor), has started a Money Movement on this very topic. He is passionate about including financial literacy in the education system so that future generations are well equipped with everything they need to know about money. 

Educating your kids on the topic of money when they’re young will set them up for financial success in their adult years. So how can you start to educate your children on the topic of money?

Start with the foundations

As soon as your kids can count, you can start introducing the concept of money. This includes the value of money – how to save money, grow your savings, and how to spend it wisely. When explaining these concepts, it is also important to highlight the difference between needs and wants as this will set some good foundations for their money habits in the future.

Talk to your kids about goal setting

Another important element of money education is talking about goal setting. From a child’s perspective, this may include understanding the difference between short-term goals such as a weekly treat or saving for long-term goals such as a bike. Being able to manage different goals goes a long way in preparing for the realities of adult spending!

The power of compound interest

When introducing the topic of savings, it is important to highlight the concept of compound interest. You may consider paying interest on money that your children save or even matching them when they reach a certain amount. This will help them appreciate the benefits of long-term savings. You could even take your children to a bank to open their own savings accounts so that they can understand the responsibilities involved.

Household money conversations

By involving your children in household conversations, they will start to form an appreciation for necessary expenditures. You can teach them about avoiding waste when cooking, using leftovers efficiently and how to do the grocery shopping economically. This can be done by showing them how to compare value on certain products and looking for good quality products that will last longer. You may even choose to keep your shopping list on the fridge so they can understand the process of planned spending.

Importance of research 

We’re less likely to make regretful decisions when we research products first, especially for high-value purchases. You can teach your children about the process of researching to find the best product or service for the best value. This could involve looking at reviews, observing the benefits and potential risks as well as looking at warranties and refund policies. It’s also important to help them learn what kind of advertisements may be spam when something seems ‘too good to be true’.

 Regular money lessons

You’ll be able to reinforce these important money lessons by scheduling regular discussions. You can discuss the foundations and build on this over time so that they have a rounded understanding of topics such as credit cards, interest rates, investment options and what is happening in the local economy.

There is so much to learn when you’re young and by starting earlier, you can set your children up for financial success. If they can learn how to save and make the most of compound interest when they are young, they will be thankful in future years when their savings can accumulate faster.

APS Term Investments

Many families choose to educate their children on saving and earning interest by opening an APS Term Investment. We offer a competitive interest rate of up to 4.00% p.a. – that’s four times what most major banks are offering! This way, children can see their money grow over time and learn the value of long-term savings.

kids term investment

To learn more, click here.