Financial Literacy for Kids: The Money lessons every South African parent should teach | National Savings Month

In South Africa, where economic realities can be diverse and challenging, equipping our children with financial literacy from a young age is no longer a luxury but a necessity.

It's about empowering them to navigate the complexities of money, make informed decisions, and ultimately build a secure and prosperous future. 

And the truth is, this vital education doesn’t begin in the classroom; it begins at home.

As parents, we are our children's first and most influential teachers. 

Just as we teach them manners, kindness, and honesty, it is our responsibility to instil a healthy understanding of money.

The habits they form in their early years will have a profound impact on their financial well-being as adults, shaping their ability to achieve their dreams and weather life's inevitable storms.

As South Africans, we face unique financial challenges, from high levels of debt to wealth inequality. 

By teaching children about money early, we are building a foundation for financial freedom, helping them understand budgeting, saving, investing, and how to avoid debt. 

We are also preventing future mistakes by helping them steer clear of common pitfalls like overspending and accumulating bad debt. 

This education fosters a mindset of responsibility, as children learn that money is earned through effort and that careful planning leads to achieving goals. 

Furthermore, providing all children with financial knowledge, regardless of their background, can contribute to a more equitable society. 

Finally, in an increasingly cashless world, it's so important for children to grasp that real money is being exchanged, even though they can’t see physical notes and coins.

Age-appropriate financial lessons

Even if you haven't started teaching your children about money from infancy, it's never too late to begin. 

The key is to tailor the lessons to their developmental stage, making them engaging and relevant to their lives. 

I can speak from personal experience on this.

As a mother of a 12-year-old daughter, I'm now actively teaching her about saving and financial responsibility. 

She gets a weekly allowance for helping with household chores, which we deposit into a savings account we opened for her. 

She's now at an age where she can make decisions about her spending and learn from the consequences of poor choices. 

For instance, she once spent all of her money on Robux, a mistake that taught her a valuable lesson about instant gratification versus saving for something she truly wants. 

She's now a pro at saving and has a clear goal in mind: shopping for clothing on Shein, with a full cart already prepped.

Here is a breakdown of how you can teach your children about money at different stages.

Ages 3-6: The seeds of understanding

• The money jar: Introduce a clear savings jar so they can actually see their money grow. Consider having separate jars for "spending," "saving," and "sharing."
• Wants vs. needs: Use everyday scenarios, like a trip to the shops, to explain the difference between things we need and things we want.
• Earning through chores: Linking small chores to pocket money teaches them that money is earned and not simply given.
• Counting money: Handle cash together by letting them count out coins for a small purchase or to perhaps pay for parking.

Ages 7-10: Building habits and simple budgets

• Set saving goals: Help them set short-term, achievable savings goals for an item they want. A visual chart that tracks their progress can be very motivating.
• The power of interest: To introduce the concept of earning on savings, consider matching a portion of their savings.
• Simple budgeting: Introduce the idea of a mini-budget for their allowance or gift money.
• Comparison shopping: Involve them in grocery shopping by asking them to compare prices of similar items and explain why one might be a better value.
• Opening a savings account: Once their savings jar is full, take them to a bank to open a child-friendly savings account.

Ages 11-14: Understanding consequences

• Involving them in family finances: Share aspects of the household budget in simple terms by explaining income, essential expenses, and how the family prioritises spending.
• Tracking spending: Encourage them to track their own spending using a simple notebook. This helps them identify where their money is going.
• Short-term vs. long-term goals: Help them differentiate between saving for something small, like a necklace they spotted at the shop, and saving for something bigger, like a bicycle.

Ages 15-18: Preparing for the real world

• Complex budgeting: Encourage them to create and manage their own detailed budgets, perhaps for school events, clothing, or even a part-time job income.
• Understanding income and taxes: If they have a part-time job, discuss gross vs. net pay and the concept of taxes.
• Exploring career paths: Discuss different careers and their associated earning potential, linking education and skills to future income.
• Credit and debt management: Have open conversations about credit cards, loans, and the importance of a good credit score.
• Saving for big goals: Discuss saving for university, a first car, or travel.
• Avoiding financial scams: Discuss common scams and the importance of financial security and online safety.

The parental role

Ultimately, the most powerful tool in your financial education arsenal is your own behaviour and willingness to communicate. 

Be a role model by demonstrating good financial habits yourself. 

Talk openly about money in your household in an age-appropriate way, demystifying it for your children. 

Allow your kids to make small financial mistakes within a safe environment because learning from these early little missteps is invaluable. 

IOL Lifestyle