Teaching older kids about money

RESEARCH shows that it is not the media and not your child’s peers, but you, their parents, who most heavily influence how kids think about money as they grow up. 

Last week, we talked about tips & tricks about how to teach kids about money matters while this week is aimed at slightly older kids.

Give your kids their own bank account and later also their own trading account. This will create pride, ownership and accountability. It will help them become familiar with simple transactions and the stock market.

Give them a debit card (and maybe even a credit card), to make them familiar with plastic transactions and understand it is not free money, but – in the case of a credit card - a small, short term loan. 

Teach them about the value of money (and education!) through chores in the household for which they are paid.

Use the app store on your or their phone to teach them about digital transactions. Show them how digital gold coins in a game can become real, after they have been bought with a credit card, and are ultimately deducted from your savings account.

Start a really small business. The lemonade stand or the scout’s cookies that are sold door to door are perhaps the most famous – but too American – examples. Every country will have its own (online) opportunities. This teaches them about entrepreneurship and how revenue, fixed and variable cost and profit are related.

Match savings, or give an incentive (beyond interest), to motivate saving behaviour and help them learn about interest and delayed gratification: if they hold off spending their savings, they will have more money to spend in the future.

Have your kids sell the toys they don’t want any more on Mudah.my or Carousell and save the proceeds for new toys or another goal.

Teach them about different currencies and exchange rates when making a trip abroad. Make them understand a currency is not more valuable just because it has more zeroes on the banknote. Let them translate prices from one currency to another currency.

Give them an allowance to make them responsible for their own necessities and let them make their own trade-offs, e.g. credit for their mobile, clothes, transport, food, school supplies etc.

Teach them about inflation, by increasing the price of stuff they want to ‘buy’ from you (like time on iPad or favourite dessert or holiday destination), but also increase their pocket money and the money they can earn for doing household chores. If both increase the same amount, they have to realise they do not become a cent ‘richer’.

This is my personal favourite: bring home a monthly gross salary in cash. Show how it is reduced through spend on taxes, rent or mortgage payments, utilities, subscriptions, groceries etc. And how in the end, the stack of money that you can spend any way you see fit is much, much smaller than the initial stack that was brought home.

Finally, set a good example yourself, by being responsible when it comes to how you manage your money. In the end, kids copy their parents, for better or worse!!

Mark Reijman is co-founder and managing director of  https://www.comparehero.my/ dedicated to increasing financial literacy and to help you save time and money by comparing all credit cards, personal loans and broadband plans in Malaysia.