Educating your children about finance, budgeting and money is becoming increasingly complicated. Technology is constantly changing and the digitisation of money is changing people’s relationship with how they spend. When money was physical cash, learning to budget was a more natural process – it was easier to see your wallet or purse emptying and impulse buys were more difficult if you had to detour via an ATM.
Here are a few tips to help you educate your children about money:
It’s important to teach your children how to set goals and work towards them – whether it’s a small savings goal over a month or saving for summer holidays or a big purchase such as a new gaming console or phone. Teaching them how making smaller sacrifices each week can be rewarded in the long-run!
Set a budget – and stick to it!
It is one thing to set a budget but sticking to it is the important part. You can start learning this from a young age with pocket money or a weekend job in high school – sit down with your children and help them map out how they want to spend their money. Bills should come firs t- a great starting point may be their phone bill or a subscription they enjoy.
Track and review spending
Have your children review their bank statements to see where they are spending their money – are they spending too much on something they don’t need to be? Or maybe they are spending a fortnight’s budget in one week.
Save Save Save!
Learning to spend less than you earn is an important lesson – it helps you save for bills and bigger purchases and lets you build an emergency fund. Unexpected things will always happen and learning to be prepared is important.
Another idea might be to take it back to basics – have your children use notes and coins to let them visualise their spending in front of them. Have them only carry what they need each day to reduce impulse or unnecessary purchases and stow away their savings in a money box!
Educate your children to save and plan ahead rather than rely on quick fixes with credit cards or personal loans. The debt can quickly build up and cost a lot more.
Ask for help
There are loads of great online tools to help – ASIC’s Money Smart website is a good starting point for young Australians who have started working or are moving out for the first time. Or if you want to start planning for your first home purchase, Union Shopper Mortgage Planners can help you map out savings plans and deposit budgets. Get in touch for more information on 1300 760 688.