Teaching kids how to handle money is about more than dollars and cents. It’s about building character and responsibility.
Children and Financial Responsibility are two words that don’t necessarily go hand-in-hand, but they should. Today the lives of children are full of material desires and they are exposed to an onslaught of commercial marketing from an early age. October is Financial Planning Month and at NFK we firmly believe that when it comes to children and money, it is never too early to teach them the value of every single penny that they earn, save and spend. Here are a few nudge ideas to help you get started.
Savings nudge –Preschooler
When you give your child their pocket money at the beginning of each month, place two jars before him/her. Stick a smiley on one jar (for money to spend) and a jackpot symbol on the other (for money they can deposit and save). Explain to your child that the jackpot jar represents their savings account. Once they have saved enough, the can be spent on a new toy, game or an excursion of their choice.
This nudge introduces children to the concept of delayed gratification and elevated rewards instant access and gratification culture
Sensible shopping nudge – Tweens
Ask your child to accompany you to the grocery store and give them a shopping list along with an assigned budget for the month. Colour code the items on the list – red for basic requirement items and blue for luxury items that family members would want to buy but may not necessarily need. Then let your child sit with you and correspond the requirements with the budget, deciding what should be purchased and what should be left out. This is an effective nudge which introduces young adults to the challenge of running a home on a limited budget each month.
The key word here is communication. The above nudges and all your lessons will be futile if you don’t talk to your children about the financial status of the family. Talk to your child clearly about saving for their studies, saving for retirement and discuss investment options as part of the dinner table conversations sometimes. As parents it becomes important to nurture financially aware children who can fly on their own when it is time for them to do so.