There a 5 Reasons why you should have a conversation with your kids about money
When they say money makes the world go around it is indeed true. Money is the most utilized commodity globally but it is at the least prioritised conversation in our education system especially in South Africa. This is why it is important and we ask if you have started having conversations with your kids about money?
It is important to teach kids the basics about money and the importance of the value and the managing of it. The simplest way to start is by having conversations that assess what their perception and thoughts on money are, ask them questions like :
- If I gave you money what would you do with it?
- What do you think about money?
1. Budgeting Skills
Budgeting skills teach kids to prioritize their spending based on importance, differentiating their spending between needs versus wants. This will make sure they make spending decisions that are within their means.
2. Money Saving habits
Always stress the importance of saving before spending. What will help is teaching the kids to have financial goals that they’d like to achieve like buying a new game? This would mean they have something they desire that they need to save towards in order to purchase it.
3. Financial dependency on parents
As your kids grow and learn to be financially savvy they become financially independent sooner. As a result financial dependence on you as parent decreases.
4. Economic benefits and social responsibility
Research indicates that kids, that grow up understanding money and experiencing money-making decisions that are fostered throughout their lives to young adulthood will be in a position to make positive financial decisions in their personal lives. Human beings are creatures of habit, learning good money management habits will have a ripple effect on their careers and workplace as well their own businesses.
5. Effects of lack of financial literacy
This means the vicious cycle of financial decisions that have a negative impact will continue to be made by our kids when they reach adulthood such as not budgeting, lack of savings and investing and increased debt. As a result, our kids become unproductive members of the economy and society as they will not be in a position to assess financial risks and opportunities.
Teaching kids about money is an important life skill. We are required to make decisions about money daily. The more financially savvy your kids are the more healthy financial decisions will be made throughout their lives which will impact their lives positively.
Source: Agenda Women