5 Financial Lessons to Teach Your Children Before They Turn 12

Give your children an early introduction to the all-important concepts of money – from saving to being a clever consumer!


To Be Young and In Debt

It’s a future no parent envisions for their children but an article by the Malay Mail in 2016 claimed that an estimated 11 people under the age of 35 go bankrupt every day.

In addition, a whopping 1,157 people under the age of 25 have been declared bankrupt between 2012 and 2016. That’s certainly reason enough to start educating your kids about money as early as possible.

Here are important financial lessons you can teach your kids, especially the younger ones:

5 Financial Lessons to Teach Your Children Before They Turn 12

1. Where Money Comes From (from the age of 5)

We’ll venture so far as to say this question is going to be much easier to answer than “where do babies come from?”. But in all seriousness, you don’t have to get into the technical definitions, instead focus your explanations on money being earned. The basis for this lesson is to teach your little ones the value of money.

This is a good time to introduce allowances for little chores done around this house. This will help them equate work with money and prepare them for the next lesson: saving.

2. How To Save (from the age of 7)

A 2013 study made a positive connection between financial literacy and saving, planning for retirement and making informed financial decisions. Thus, learning to save is probably one of the most valuable lessons to impart on your kids.

Saving carries with it other virtues and teachable moments such as patience and responsibility. An effective way to teach about the importance of saving is to empower your kids to get started on personal financial goals. It can be as simple as buying a new toy or game with their own money, once they’ve saved up enough.

This way you’ll be encouraging them to see the importance in putting money away as well as giving them a glimpse of financial independence.

Read Also: Money Lessons Hidden in Classic Children’s Games

3. Spending Responsibility (from the age of 9)

Children are not often in a position to overspend, not just since they do not have access to credit but also because, it will be you the parent who does the spending. Thus, if you aren’t mindful of your spending habits, it’s possible for your child to pick up on it as well.

A good way to teach responsible spending is to give your offspring some control over their purchases. For instance, allow your kids to spend a portion of their birthday or festive money on his or her food expenses for a day. From here, your child can learn to set money aside for each meal and spend within their means.

4. What is Budgeting (from the age of 10)

Once your kids have an allowance or access to money, they can start learning about budgeting and managing the funds in their possession. It’s a necessary life skill that should be cultivated from a young age so that your child, no matter their future earning potential will always know how to maximise their income.

This lesson really builds on the basics of saving and spending – and takes it a step further by teaching them how to manage money and prioritising more important goals.

Give your kids the opportunity to budget with you on little tasks such as helping you with grocery costs for the week and planning monthly savings as well as small family outings. Encourage them to start their own budget to balance personal expenses such as toys and games with savings goals.

5. How to Be a Clever Consumer (from the age of 11)

Once the foundations of financial literacy has been laid (in the first four lessons), what should follow is the ability to discern between good and bad deals. Teach your children to compare between products and services before making a purchase. Shopping around for affordable prices that still offer good quality will help your kids make better money decisions in all areas of life as they mature.

A good way to teach them how to be a better consumer is by involving them in your shopping process – how you choose groceries, buy a computer or what you look for when shopping for clothes. Teach them to compare in terms of price and quality rather than just choosing by brand.

Learning how to be a smart shopper is a long-term process. Continue teaching them about more complicated purchases as they get older – for instance, how to use comparison sites when buying insurance.

But the best thing you can do right now is to start your kids off with a savings account for a better financial future. Choose a junior account with extra special benefits like bonus interest earnings, free insurance and more from our comparison page!


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