How to talk to your children about money & the 10 lessons they NEED to learn

Financial literacy is a problem in South Africa that isn’t given sufficient attention. Money management is a critical life skill required to achieve financial wellness and to create, build and manage wealth.

A lot of parents rely on the school system to teach their children life skills and, as a result of not being taught money management skills themselves, many parents aren’t equipped to have positive and appropriate money conversations with their kids.

Jean Archary, who works in financial planning, found it challenging to explain financial concepts to her daughter, Taria, when she was six years old.

She wondered if other parents were struggling too, so she wrote Mrs Spiggles and her money tales: money messages for kids.

Through Mrs Spiggles, Jean hopes to share important money messages with children regardless of their financial upbringing, with the hope that they are better able to manage their finances throughout their life journeys.

The top 10 money lessons all children should learn from their parents

1. Tell them that they can earn an income by doing what they love – parents must encourage talents, passion, and purpose.
2. Get them into the habit of saving – every child needs to have a piggy bank or bank account and save a portion of all their money earned or received.
3. Learn to budget – draw up shopping lists together as a family and get your kid involved in ticking off items when shopping.
4. Shop around – teach kids to compare prices and spend with the intention of saving.
5. Show them the benefits of compounded growth, especially for long-term savings.
6. Talk to them about the importance of saving for their old age – only 6% of South Africans will retire financially comfortably. The only way to increase this statistic is to get our children to start saving for this from the time they start earning money.
7. Avoid using negative language when it comes to money – i.e., money is the root of all evil. No, it is not, money provides options and opportunities, it is our values that may be misplaced.
8. Instill an abundance mindset – if your kids want something and you say you cannot afford it, you shut them down. Rather say, this is not in my budget right now, but if you really want this, what can we do to buy it? This encourages them to think about the ‘how’.
9. Discuss the reason behind taxes and how paying them contributes to the overall economy.
10. Encourage them to give, be it time, talent, things, or money – giving back when we have so much teaches us gratitude for what we have.

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What is an appropriate age to start talking to children about money?

Our children develop at different ages or stages, so the maturity of the child needs to be considered by the parent when introducing different money concepts. Children can be introduced to money concepts from the age of 3 years old.

They can start earning money as an incentive for small household chores. In this way, they appreciate the value associated with money. Earning money should be fun. So many adults earn an income from doing jobs they hate.

Reward children for chores completed and use visual aids to motivate them. A star chart can be used to indicate various chores with different financial rewards. For example, picking up their toys earns them R1. Making their bed earns them R2.

Every child should also have a piggy bank – this can also be a clear plastic jar that allows them to see their savings. As the child develops the chores can change, as well as the amount of the reward. The piggy bank can then become a savings account.

What about people who say they are too young?

Healthy habits are formed from a young age. The responsibility lies solely with the parent to decide if their child is mature enough to understand the concepts that they are teaching. The problem in South Africa is that we do not have a savings culture.

Contributing to this is the fact that many of us were not taught from a young age to prioritise saving for what we want. Instead, we were taught instant gratification. Parents find it difficult to say “no” to their children – for example, if a child throws a tantrum in a busy store, the easiest way to calm them down is to buy them what they want.

I had the experience of witnessing this in my own daughter when she was two. I refused to give in and not a single tantrum was thrown again. When parents reward children for negative behaviour it reinforces that behaviour. When we teach them the power of delayed gratification, children save for their future long-term goals.

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How much of your family’s financial affairs should you share with your children?

Money is generally a taboo topic in most households and many view it as something private. The level of information you disclose to your child needs to be age-appropriate, dependent on your family situation and the type of relationship you have with your child.

Our discussions at home regarding finances are very transparent. I discuss household expenses, budgets, savings, and what will happen – financially – if I die, with my twelve-year-old daughter.

Many of us grew up in a generation where we were not allowed to question our parents. Our children today are growing up in an environment where we encourage questioning as part of critical thinking.

If your child questions the household finances, a response such as, “It’s none of your business”, is likely to shut down your child from asking further questions and this does not encourage trust. Try to understand where the question is coming from and this should direct a proper response.

Why did you structure the book as short stories with different characters?

I wanted the book to be appropriate for both boys and girls from different cultures and backgrounds. I felt that with the introduction of various characters, Mrs Spiggles would appeal to a diverse range of kids.

Each story in the book is built around one of the four main money lessons: earning, saving, spending and giving.