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It pays to teach children about money when they are young

We all would like for our children to be financially literate. But, when is it best to start? How do we go about it? Read on to find out.

Most parents understand the importance of teaching their children about saving and managing money. However, the mistake some parents make is waiting until their children have reached their teens before speaking to them about money.

Once your child is old enough to understand the concept of money, you should start introducing them to the idea of saving. Preschool or kindergarten is a good time to start, as developing a good savings habit early will help set a good foundation for the rest of their lives.

Here are a few ways you can help teach your children about saving:

Children love to draw. So, ask your child to draw a picture of something they really want, like a new toy. Then, under this picture, draw a long bar marking saving milestones they need to pass in order to reach the cost of the item. Then, every time your child saves money toward their goal, get them to colour in that section of the bar. You could also use stickers to do the same thing.

Tip: You can download and print The Beanstalk’s Savings Tracker activity sheet.

First, explain that things aren't free and adults need to work to earn money to buy things. It’s key to communicate that people only earn a limited amount of money each week, so it is important to differentiate between needs and wants. Communicating this important idea early will hopefully make budgeting conversations in the future that little bit easier.

Tip: Next time your child asks for something, ask them if they really need it, or if it's something that would be 'nice to have'. Explaining that we need to put our needs before our wants can be difficult; but it really is a worthwhile lesson.

It really does pay off to learn from an early age the importance of getting into the habit of saving. Going to the bank and depositing money in your savings account can be an exciting event for a young child. Especially in this digital age, the act of depositing the money physically helps children visualise and understand the process of saving.

Once your child starts school they may also be able to participate in School Banking. You can find out more about School Banking and the rewards your child can earn.

Tip:
 The Beanstalk's 'Money Maze' is a fun way for children to learn about saving and going to the bank. You can print out a copy here.

Teaching the value of saving is also about managing how you spend money. Next time you go shopping with your children, have them answer simple questions like, “Do you really need this item?” or “Could it cost less somewhere else?”. This will help them gain perspective on wants versus needs and how to make the most of what money you have. You may like to test a real life scenario to put this into practice, next time your child gets invited to a birthday party, perhaps let them choose the gift with a set budget amount

For more tips about money and kids, head to The Beanstalk.

Things to know before you Can: This advice has been prepared without considering your objectives, financial situation or needs. Because of that, you should, before acting on the advice, consider its appropriateness to your circumstances. Terms and conditions for transaction and savings accounts mentioned are available here (PDF 660KB). Please read our Financial Services Guide (PDF 60KB).

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