In younger children, food is a great proxy for money. You can see that some children are hard-wired to savour and save it, while others will gobble it all and then cry. (I have one of each.)
Encourage your children to think of “future you”: “You’ll be sad if you eat all your treats in one sitting,” I often say.
When they get old enough for pocket money (which, in another life lesson, should always be earned and not bestowed), you can implement what I call my “magic savings split”.
Money is finite – another crucial message to convey – so you need to help your child to carefully decide how to allocate it.
Although they probably could not care less right now, long-term goals are the most important.
As per the tried-and-tested money mantra, 10 per cent of everything your child earns should be saved for the “big stuff”. This might be for a first car (my seven-year-old has $43 squirrelled away for this. And it’s going to be pink). It could later morph into schoolies or even a house deposit.
The other 90 per cent can be apportioned as your family sees fit between three different categories:
- Generosity: This can be charity but it is also good to include presents and random gifts of kindness for family and friends. It lets children experience first-hand the joy of giving.
- Fun now: Have a “fritter fund” for small, spontaneous, guilt-free spending that will give your child a serotonin burst.
- Fun later: Your message: money is for spending, just not all at once.
A recent survey by child-friendly money app RoosterMoney shows kids on average save 40 per cent of their money. It also reveals that the goals of “COVID-19 kids” have swung heavily to online gaming, with Roblox and Fortnite overtaking books and sweets.
Which brings me to my final important point.
Right now, money dumped into a jar just won’t work. As we move toward a coronavirus “new normal”, many shops will probably prefer a contactless card transaction rather than cash.
An app that allows your child to set, cost, schedule and track their progress towards savings goals is now more relevant than it has ever been. There are plenty available, including those that let you define pocket money tasks and payments.
Financial educator, commentator and author.