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]]>Our aim is to help parents and educational leaders to teach our kids how to make good decisions with their money. What and how you teach your child about money depends on a lot of things, but it's essential that your child is equipped with the knowledge, skills and confidence they need to enter adulthood prepared to make good financial decisions.
The mountain is steeper for our children
There's no doubt about it. It's been harder for our generation to get ahead financially than it was for our parents, and it's going be even harder for our children. It is important that your child learns about earning, saving, borrowing, lending and investing to be able to get ahead in today's economy.
We live in an age of instant gratification where we're able to access almost anything within a few clicks. Our children are more familiar with paying with plastic than using in cash where it's easier to get a sense of how much you're spending and what is left. Young adults have easy access to credit and the concept of borrowing to live beyond their means is largely accepted. All this can lead to bad spending habits, that results in student, personal and household debt.
Take student loans for example. Student debt has ballooned to R16.5 billion (US$1bn), up from R14bn at the end of 2019, Linda Meyer, director for operations and sector support at Universities South Africa disclosed in March 2022. South Africans are now going into their 30s, 40s and 50s with student loan debt they've not paid off. The question we have to ask ourselves is, have we done enough to equip our youth with the financial knowledge they need to make wise financial decisions or are we allowing them to learn by costly trial and error?
We understand that financial freedom means different things for different people. For some people it may mean the ability to pay university fees for the first graduate in the family, for others it may mean paying off a long-standing family debt, or it may mean travelling to the coast to enjoy the sea for the very first time. No matter where you are on the journey towards obtaining your financial freedom, it's never too late to start.
Here are some practical tips from Mylife and MoneyTime SA to explore with your child, and get your child interested in working towards financial freedom:
Create a financial freedom vision board with your child
Ensure your child remains motivated to achieve their goals by creating a vision board that they can work towards. A financial vision board is a useful tool to help you clarify, concentrate and maintain focus on your goals. It is simply a collection of images, words, numbers and dates around a specific goal. Seeing this board every day will help you and your child to stay focused when the end seems nowhere in sight. This visual stimulation will keep you motivated to adopt healthier money habits, helping you and your child to stay on track and to achieve milestones.
Help them set specific concrete goals
It's no fun saving if you don't know what you're saving for. Give your child a savings goal - such as a deposit for a toy or event, cool clothing or even luxuries. When deciding on a goal, consider how much they need to save, and by when. Concrete dates and amounts will help to motivate both of you. Give them chores around the house to earn extra pocket money, its a win-win for all.
Reward your child
Don't forget to treat your child when they reach a savings milestone. This will help motivate them to keep putting any extra cash away when they can. In addition to focusing on the big goals, aim to also set smaller, short-term goals as these will reap quicker results and keep you both motivated. For example, saving money each week for a trip in six months time will keep you inspired to put the money away.
Help your child to create a budget
A budget can help you accurately manage your money. By creating a budget, you can see exactly how much money is coming in and out of your accounts, how much debt you have and how you can make strides to reduce that debt. For many, figuring out how to live on a budget can be a steep learning curve. A budget helps you to see that you're spending RS00 a month on takeaways, and R100 a month on an online subscription you aren't even using. By knowing how much they spend on what, your child can optimise how they spend their pocket money every month and start to steadily grow their savings.
Teach your child to use 'plastic money' with care
Credit and debit cards have become essential, especially when you take into account the increasing amount of online transactions. On the other hand, the average person spends more per transaction when using plastic. Paying with cash will make you think twice about making any purchases. Come into the habit of using cash when spending money with your child and let them do the math with you.
Maximize voucher, loyalty and reward programs
Voucher and Reward Programmes like MyLife Lifestyle, can come in handy to stretch the rand. You can enjoy discounts on your monthly spending patterns. If you plan right, you can use your vouchers to pay for everyday living items and even some nice to have reward items. Visit www.mylifelifestyle.co.za for more. Teach your child to use these programs to their advantage.
Get your child going on MoneyTime - let the games begin
Let us be intentional about freeing our children from the shackles of over indebtedness and a lack of knowledge around their finances. Now is the time to empower our youth with the knowledge to manage their finances and to ultimately grow their wealth for now and into the future. The MoneyTime SA financial education programme was created just for this purpose.
MoneyTime includes a fun money management game as part of the course. Children are rewarded with virtual money within the game for answering questions correctly and can then decide how to spend it. They can shop at virtual stores, donate, or invest in further education and property that will increase their long-term wealth. In this way, MoneyTime teaches your kids how the consequences of their financial decisions work without the real-life pressure, risk, or fear of failure.
MoneyTime lessons are only 30 minutes each and cover a wide range of money lessons including employment, job application, career choice, banking, property purchase, investing and business basics. Additional to the 30 student lessons, there are 13 parent child lessons. These are designed for students to complete with a parent or trusted adult. They are optional but highly recommended as they help to put learning into real life context.
Lessons are combined with a fun money management game. The game lets children try out the strategies they've learnt in the program to grow and manage their money. Gift your child with financial literacy, one of the most important life skills you can give your child. Click here to learn more and subscribe.
Awards
MoneyTime was awarded runner up for the Best Non-financial Services Company at the inaugural 2022 Money Inclusion and Awareness Awards (MAIA), in what judges considered was the most tightly contested category of the evening.
MoneyTime is also proud to have won the Children's Education Program of the Year - Financial Responsibility & Decision Making award for 2022 presented by The Institute for Financial Literacy.
For more information or to enroll your child or school today, contact us on
+27 72 118 3258 or rietha@moneytimekids.co.za
]]>MoneyTime is proud to announce being awarded runner up for the Best Non-financial Services Company at the inaugural 2022 Money Inclusion and Awareness Awards (MAIA), in what judges considered was the most tightly contested category of the evening.
Of the 150 entries there were 40 finalists, 24 are receiving an award, 9 winners, 8 runners-up and 7 special commendations. Neil Edmond, MoneyTime’s CEO, said he was incredibly proud to have MoneyTime recognised as one of the organisations globally that is trying to make a difference to financial literacy rates.
MoneyTime started in New Zealand but is now available globally for use as a financial literacy curriculum for primary and high schools, by homeschoolers and for children at home. The program can be customized for any country or language as it is fully digital.
The MAIA awards, based in Singapore, were created out of the concern that adults and children the world over are not being taught about money. According to a presentation made at the event, at least ⅔ of the planet are financially illiterate. Examples included ⅓ of US teens not knowing the difference between a credit card and a debit card, close to half of all Indonesians having just a 7 day financial cushion and ⅔ of the people in Spain having their savings in a current account.
The MAIAs is an independent, decentralised body, backed by a network of influential supporters. The awards seeks to raise awareness of the many problems poor financial literacy causes, while highlighting the best financial literacy solutions available globally. Awards are judged by leading academics, NGOs, journalists, influencers, and asset managers.
MoneyTime is proud to have won the Children's Education Program of the Year - Financial Responsibility & Decision Making award for 2022 presented by The Institute for Financial Literacy.
The award was announced at the 16th Annual Excellence In Financial Literacy Education (EIFLE) Awards on April 25, 2022 during the Annual Conference on Financial Education. MoneyTime’s CEO, Neil Edmond had this to say "We’re delighted to be have been recognized for the contribution we are making towards increasing global financial literacy rates through childhood education. This award further validates our approach of making learning fun by combining learning with a game so its easy for children learn solid financial literacy skills and feel empowered to make good financial decisions as they grow up.”
MoneyTime is available for use as a financial literacy curriculum in schools, for homeschoolers and for kids at home for teaching kids between the ages of 10 and 14 about money and finance.
The Excellence In Financial Literacy Education (EIFLE) Awards were established to promote the effective delivery of consumer financial products, services and education by acknowledging the accomplishments of those that advance financial literacy education. Each year, the Institute for Financial Literacy presents the EIFLE Awards to organizations that have shown exceptional innovation, dedication and commitment to the field of financial literacy education.
The Institute for Financial Literacy is a nonprofit organization whose mission is to promote effective financial education and counseling. As a national authority on adult financial education, the Institute advances professionalism and effectiveness in the field of financial literacy by setting the National Standards for Adult Financial Literacy Education™, hosting the Annual Conference on Financial Education™, presenting the Excellence In Financial Literacy Education (EIFLE)™ Awards.
Well, a good place to start is thinking about your own behaviour and trying to eliminate or change some of your less helpful habits. Here are some common ones to look out for:
Many parents find it difficult to talk to their kids about money. Mostly because they were not taught about it themselves. So they don’t know what to teach or how to teach it. This is compounded by the embarrassment of not having all the answers and even worse, having to admit they’ve made costly mistakes.
However, not talking about money to kids is setting them up for financial disaster. After all, money makes the world go round. We all use it, we all need it. It gives us choices and the freedom to do things for ourselves, our family and our community. Kids need to know about it so it’s essential we include them in our day to day conversations - like doing the shopping, buying stuff online, going to the bank, budgeting for a holiday. Don’t worry if you don’t have all the answers - honesty is the best approach then they know exactly where their starting point is and won’t get confused when you try fudging your answers.
Some families are comfortable financially and the parents don’t think it necessary to teach their kids money management - there will probably always be enough, even if their kids do make mistakes or miss obvious opportunities. In other families the shame and embarrassment of not having much means they leave it to chance. Either way they hope schools will pick up the batton. But this is foley.
Only six states in the US require a stand-alone personal finance course to be taken in high school. Less than half of states (21) require high school students to take a course that integrates personal finance content into existing classes such as math, economics, civics and career and technology courses. Is five to eight hours in a course enough? Of course it’s not.
And this is at high school level. Research has shown that a person’s financial habits may be established as early as seven-years-old. By this stage many kids have already got into bad habits of instant gratification and spending beyond their means. They don’t know the value of money, that it is usually hard earned, it doesn’t fall off trees or come in an endless supply from your wallet. Kids need to be taught the basics when they are starting to have money of their own and very few elementary schools have a dedicated program to do this.
Christmas and birthdays are obvious exceptions but giving them money without them having to earn it means they don’t learn the value of it. That it doesn’t grow on trees or appear automatically from a hole in the wall. Money is earned by working hard and being smart. It’s one of life’s immutable laws and the sooner they get that ingrained in their heads, the better for their future and your cashflow.
Kids need to know that everyone pitches in. When it comes to house keeping, chores are part of the deal. When everybody helps, Mom and Dad don’t end up exhausted by having to do it all and kids get the satisfaction from having contributed. However if you pay your child for completing basic chores, like washing the dishes or hanging out the laundry, you undermine the feel good they get from doing it for love.
A better option is to pay them for one-off projects or jobs beyond their regular chores. For instance cleaning the windows, washing the car or mucking out the hen house. Paying them for these helps them appreciate the value of money whilst maintaining the notion that in families you all help out.
When it comes to your children’s financial choices, it is a mistake to try and micromanage every spending decision they make. Not only will they not learn to think for themselves, they won’t experience the negative consequences of poor choices. Many of life’s most valuable lessons come through trial and error. Let them make their own choices. Allow the bad decisions to hurt a little and the good decisions to feel good. Giving them the freedom to experience the ups and downs of financial choices helps them understand the value of money and the importance of making smart decisions.
As a parent you know the importance of saving and it can be tempting to make your children save money whether they want to or not. But we all know the more you demand a child do something, the less they actually want to do it. It’s better to explain the benefits of saving to them (if they are disciplined they can eventually buy what they want), than to force them to do it. The trick is not to give in and pay for things when they complain they’re not saving fast enough, you’re being mean, you don’t love them etc. That just reinforces that you will always come to the rescue when they don’t have what they want and that money just appears for them without any effort.
A natural concern for many parents is their kids won’t understand more than basic financial concepts like spending and saving. However kids are smarter than you think. They can understand topics like mortgages, real estate, investing and business if you start at a basic level and level up when you know they’ve got it. Starting early ensures they are familiar and comfortable with these concepts, which means they are more likely to embrace them confidently and successfully as adults. The younger they start learning about these things, the better.
Sure, your shopping trips will be less stressful without a bunch of hangers on but without experiencing spending decisions in real life, for the kids it’s all just theory. So, rather than leaving them with your spouse or a sitter the next time you go to the store, take them with you and explain things to them as you go. Comparing products can help them understand the difference between cost and value. Sharing your shopping budget with them will help them learn how to spend within their means. And even though debit cards and mobile apps offer painless payment, consider using cash and letting them observe the physical exchange of money for goods. This will help them understand that once you spend your money, it’s gone.
Credit card debt has the potential to derail your kid’s long-term financial stability. Without understanding the true cost of debt, your kid may be headed for a gutser when they turn 18 and get inundated with credit card applications. They may be lured into getting credit cards and thinking their credit limit means they “have money.” Of course this is not the case. It’s borrowed money and if the repayments are not met, the interest escalates rapidly. Try lending them a small amount of money and setting a time frame for them to pay you back, with interest. When they are earning money by doing jobs and see that quick access to money requires them to pay back more than they borrowed, the value of their hard-earned dollars will become more apparent.
One of the best things we can do as citizens is to be generous and use our money to help others whenever possible. To teach your kids how to be generous, you need to model it for them. Start by talking with them about how it is for others who are less fortunate than them then get them to think how your family can help. If you decide to contribute financially, show them where the contribution is coming from out of the family budget. It should come out of surplus or be a budgeted item. By role modeling your giving in a financially responsible way, it creates a giving mindset that will nourish their soul as well as help others in need.
Teaching your kids the value of money and helping them develop solid financial habits of their own will pay off when they get older. They are more likely to be financially independent and less likely to come crawling back to you with their tail between their legs when things go wrong.
Here are five ways you can start teaching your child how to be confident with money today.
A good way to start teaching your child about money is with a weekly allowance. Letting your child learn how money works for themselves is a powerful tool to practice money management. An allowance lets them test the principles of budgeting, saving, impulse control and delayed gratification before they go out in the real world.
How much?
How much allowance you pay them depends on your financial means and what you expect them to be financially responsible for. An allowance should be treated like a pay cheque rather than a gift – something that is earned. Agree what chores they are responsible for then if they don’t do the chore, they don’t get paid. Cause and effect. It should also be clear to your child what they’re expected to buy with their allowance and what you will still pay for.
Pay it in cash
It’s a good idea to pay the allowance in cash. That way it’s real - they see it growing and diminishing. Get them to allocate it between three containers labeled “Spend”, “Save” and “Give”. It’s up to them which containers they split it between because they earned it, it’s their money. They then get to experience the consequences of their decisions.
Don’t come to their rescue
Once they’ve used up their allowance it’s important to not give your child unlimited funds for discretionary spending. If you do this, they may develop a habit of relying on additional funding sources when they want something they cannot afford. This can lead them into personal debt and high-interest credit cards as adults.
The idea here is to allow them to experiment with money of their own by allowing them to make their own financial decisions and to see the consequences of those decisions.
At three monthly intervals, get your child to put the money from their savings container into a youth Savings Account so they learn the basics of banking and earning interest.
Explain the difference between Checking accounts and Savings accounts and what interest is.
Establish a savings goal
It can be as simple as identifying something they’d like to save up for and then working out how much of their allowance each week they want to put in their savings container for it. Once they’ve saved enough money to meet their goal, check whether they’d like to use it or keep saving for something more meaningful or valuable.
For children 10 years or older you can introduce simple and compound interest and explain the benefit of starting to save early.Get them to search banks online to discover what interest they are paying on Checking and Savings accounts.
Use online calculators
These are easy to find online and easy to use. See if your child can find a savings calculator online that tells them how much they can achieve by saving and how quickly they can reach their goals.
A good learning activity is to get your child to pretend they have just been given $1,000 by their grandmother on the condition they bank it for one year. Get them to research which bank will give them the most money by the end of the year in a Savings account.
For older teens, you can use the same exercises to get them explore the cost of buying a house. Get them to search on a real estate website and select a house. Ask them to calculate how much is required for a 20% deposit and work out how long it will take them to save this amount using an online savings calculator. Then use an online mortgage calculator to help them work out the repayments required for the balance (80% of the purchase price). Get them to explore how changing the loan amount, interest rate and term can affect the repayments required.
When your child has their own hard-earned money to spend, you’ll want to teach them ways they can get the best value. Here are some activities to get them thinking.
Comparison shopping
Pick a product and ask your child which stores they would go to to compare prices. Can they find similar products at a cheaper price? Cheaper is not always better; ask them what “The bitterness of poor quality remains long after the sweetness of low cost” means.
Buying during sales
Get them to search online or in the newspaper for stores having sales. How much money in dollars can they save if they buy something on sale?
Buying online
Find something to buy online and go through the process with them. Explain how to check that the site is a legitimate business. You might be prepared to share with them a bad experience you’ve had shopping online and discuss how you could have ensured a better outcome.
Buying second hand
Get them to buy and sell something second hand. Did the thing(s) they purchased second hand work like they should? Did they last?
Discuss peer pressure
Ask your child if they’ve ever felt pressured to do something or own something to fit in? Comfort them with the understanding that everyone feels peer pressure, it’s not just them. Tell them if it makes them feel uncomfortable it’s fine for them to say “no”. If they focus on their strengths and things they like, they will attract people who value the same things and enjoy healthier relationships.
Discuss advertising
Ask your child if they’ve seen an advertisement and thought to themselves “I’ve just got to have that!”. Identify some strategies they can put in place to resist acting on that thought.
Budgets are one of the most powerful tools you can give your child to learn how to control their spending. Start by explaining what expenses and income are. Then discuss the difference between needs (e.g electricity, rates, insurance) and wants (e.g chuck steak vs fillet steak, holidaying in a camping ground vs staying in a motel).
Prepare a budget
Depending on their age you can get them to create a budget for a party or a family holiday. If your child is older, get them to create a monthly budget for the family using an online budgeting tool so that they get an understanding of living expenses, disposable income and the difference between a deficit and a surplus.
For younger children you can simplify the exercise to creating a budget for a family holiday or if they’re going to a birthday party, give them a budget they need to stay within to shop for a gift. This will teach them about comparison shopping.
Talking about finances is an important part of helping your child develop a healthy relationship with money. Instead of approaching money conversations as serious dialogues, make it a regular part of your day-to-day interactions. You can even turn lessons into games. Here are some ways to start bringing money into your regular conversations:
These activities will get your child to start thinking about the role of money in everyday life.
Making it happen
Good money management won't be hard for your child if they learn the basics and have experience managing small amounts of their own. To implement the ideas above, why not pick one activity a fortnight and explore it with them. Within 6 months they will be little cash generals and ready to learn what they can do to grow their money in order to reach bigger financial goals.
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