How do you talk to your kids about money?
A conversation about piggy banks, and teaching your kids about money
Over the weekend, my mum brought over a piggy bank for my almost 4-year-old daughter, Ria. Filled with jelly cubes to begin with; the jelly is now in her belly and what’s left is a piggy bank with a few coins in it.
Once she was explained what it was, she was on a mission to fill it up, not quite understanding why it cannot be full immediately, nor why she cannot open it to take out the coins already in it.
“You need to earn the money, Ria!” I said. “And once it’s in there, you can’t just take it out.” “Your piggy bank is not a toy, nor is the money in it.”
Not having planned for this, and quickly realizing that this is her first real encounter with money, we were suddenly at a loss for how best to position this piggy bank for her.
Clearly a lot of things have to be thought about before we bring a piggy bank into her life.
What can she earn money for?
Obviously it can’t be for eating her greens, or for tidying her toys, as she needs to do that anyway. So what can she do to earn money? Help me put away the groceries? Wash the car? She is not even 4.
The same day, my husband wanted to take her to fix her glasses. Strangely enough, she did not find it “an exciting adventure” to go on so she said no (a sign that she is growing up?), to which my husband said, “I’ll give you some monies!” I was happy to see her reaction to be “…but I don’t want any more monies,” haha. He immediately took that back and said, “well you have to come as it’s for your eyes, and it’s not up for discussion.”
Clearly, we need a well thought of, aligned piggy bank plan.
How much does she earn each time and on what basis? A coin? A fiver?
Is it better to give her a monthly allowance, and then she can earn extra money for chores?
How much is the right monthly allowance? What chores can she earn money for?
What can she do with that money she earns? Can she buy lollipops with ALL of it? What can she buy and what can’t she buy? How do we teach her to save?
When does she get access to that money? When it’s full? Or every month?
Also, when and how do we teach our children to grow their money?
What you think about money and how you value it is core to who you are as a person. We have to get it right with our children! So much to think about.
A quick Google search will list many books on the topic. Has anyone read any of them? Any recommendations would be great!
There are also many articles talking to your children about money online. I found this one to be particularly useful as a starting point. Some key tips in this article include:
Explain to your child what money is and how it is used.
Show your children how money works; let them see you making purchases with cash or card, and show them receipts.
Sammy the Rabbit story books and resources seem to be widely used for financial literacy.
It’s important to teach them from a young age that money isn’t just for spending, they should be saving money too.
Kids need to have money of their own so they can learn how to make decisions about using it. An allowance can accomplish that. However, you should consider requiring your kids to do certain chores to earn their allowance. Just about everyone values money they earn differently than money they receive.
Give your kids an allowance that equals their age.
Give your kids three jars for keeping their money: for spending, saving and giving. Let them decide what they put in what jar, and talk to them about it.
Teach them that spending isn’t always about buying what you want, you will need to spend money on things you need first.
Teach your children how to grow their money by opening them custodial investment accounts.
Children learn by example; make smart spending and saving choices so they learn by watching you.
Here is an intriguing list of tools that opened my mind on how to help my kids manage their money. (I can give my kids a debit card that I can control!?). I haven’t used any of them, but we will spend some time working out what is best for our children and what is usable in Dubai. If you know of any tools that we should check out, please share!
I also found these organizations in Dubai that seem to help you help your kids understand money:
Edfundo: Providing 8-18-year-olds a banking experience by helping them become financially literate and managing their finances from an early age.
Again, something to look into.
So I guess, as a starting point for us, my husband and I need to think about quite a few things and then start talking to Ria about them.
As the world is changing so rapidly, teaching our children the value of money and how to grow it is fundamental to their progress. I’m really surprised that this is not yet part of school curriculum. Or is it?
Have you talked to your children about money? How did you do it? Would love to hear from you!