By Melodie Veldhuizen
Moneywise children know how to work with money, that money does not grow on trees and that an inexhaustible source of money does not exist anywhere. They know how to save, how to spend money and they know the value of money. Experts offer advice on how to cul-tivate moneywise children.
• Save. Give him a piggy bank, or even a transparent glass bottle. Encourage him to save a portion, for example half of his pocket money, each month. Help him set a savings target that is feasible and not so far into the future that it might discourage him. Children who are not yet able to count, can observe the savings’ progress in the glass bottle. An older child who can count, can count how much he has saved every few months. It also improves his mathematical skills. Open a savings account at a bank, preferably one that earns interest. This reward is a good motivation to save. Encourage him to, when receiving money as a gift, pay it into his account. Take him along to the bank so that he can hand over the money himself and receive and save the deposit slip. Explain to him exactly what will happen to his money, for example saying that it is stored safely at the bank and that at the same time becomes more in the shape of interest (explain what interest is).
• Autobanks: It is important that when you withdraw money from an autobank, you explain to your child that it is your own money that has been deposited by, for example, your employer, and that you can only withdraw the amount of money that is in your account. The autobank therefore is not an inexhaustible source of paper money.
• Spending: For safety reasons many adults do their business transactions through EFT payments, the use of debit or credit cards, or cheques. Children however have to learn to handle money physically. Allow your child to pay for items that he buys himself and check himself whether he has received the correct change. In this way you prepare him for when he wants to buy a snack at the school’s tuck shop or on entrepreneur’s day. Play shop-shop as a family and allow the children to decide if what they would like to buy is really worth what it costs. Teach them to compare prices of similar items with each other and to not just buy everything they see.
• Teach him to distinguish between wants and needs. This will help him to later in life limit impulsive buys. It also teaches him the art of budgeting and to set goals. Make him aware that commercials are aimed at convincing you to buy stuff you don’t really need.
• Sometimes personal experience is the best teacher, even if it may not always be easy or pleasant. Allow him to on occasion buy something on which he spends all his money at once and which then does not afford him the lasting pleasure he had bargained on, and which in addition leaves him out of pocket for the rest of the month. The next time he will think twice before summarily buying.
• Parents’ example regarding good saving and spending habits is the most important motivator for young children. Talk to your children in a way they will understand, about your financial decisions. Instead of saying: “We don’t have the money”, say: “We prefer to save until we have enough money to buy something.”