Category Archives for "Money tips for kids"

February 10, 2020

Why An Allowance Is The Best Tool For Financial Education

Marty receiving allowance

As parents, we often wrestle with the idea of giving money to our children. Two opposing thoughts often come to play when we are dealing with giving children an allowance.

  • First is that: I want to make sure that my child will never feel lacking and that everything he/she needs is taken care of.
  • The second is that: I don’t want my child to grow up spoiled and not knowing the value of money.

These are both very valid ideas.

We want our children to have their needs met and some of their wants given. But at the same time, we want them to know that money is something that we work hard for and is something that is not given.

In A Smart Way To Start, I always advocate for financial literacy and responsibility, and I believe that one of the best ways to do that is to give your kids an allowance. It might sound counter intuitive, but an allowance will teach your kids a lot about money management.

What are the benefits of giving your kids an allowance?

It's our responsibility to provide our kids with proper financial education -- 91% of parents think so according to a Credit Suisse Pocket Money Study. Giving your kids an allowance will teach them to be responsible with their money. If you give them a reasonable (and age appropriate) amount of money, they will learn more about money and its value through practical experience.

How so?

An allowance is a fixed amount of money that we give to children on a regular basis. What they do with it is up to them. They can use it to buy toys or treats or save it for the future.

What's important to remember is this: The more we let kids have the freedom to spend their money, the more ownership they will take and learn to have for their financial actions. They will learn that once they spend their money it is gone forever. It makes them realise that either need to: save up for things that matter or spend only on things they need.

Guidelines to remember:

We want them to make sure our kids are properly provided for. But, we also want to make sure that our kids will learn valuable life lessons from what we give. We also want to make sure that they do not develop the thinking that “mommy or daddy will always give me money whenever I need it!”

With that in mind, I have tips that you can use as a guide for this practice:

Have a strict budget and stick to it. 

When your child comes up to you and says that he/she spent all the allowance you gave, do not give them more. You have to let them learn the consequences of their spending decisions. If you continue to give them money even though they did not budget, they will see money as an endless resource.

Help your child to manage time and money. 

Let your kids know that how much time will go by until the receive their next allowance. Break that down into bit-size chunks. For example for smaller children it is easier to give them a weekly allowance than a monthly one. Understanding how long a week is and how long you have to wait to get more money after you spent it all, is a very important part of the learning process.

Let your kids have the autonomy to manage their own money. 

I know it might be hard to give your kids free rein over their money. But you have to understand that they can't learn if their hands are being held the whole time. We have to learn how to trust our kids and let them make mistakes in their own money decisions. Practical experience is one of the best ways they can learn to be mindful and conscientious about their money.

As parents, we want our children to develop positive money behaviours and a responsible mindset as they grow up. What we can do to help is to instill good habits from a young age.

Dear parents, be mindful that an allowance is not just a privilege you give to your kids that empowers them with choices. It is also an important tool to teach them about the responsibility that comes with choice.

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January 27, 2020

Parental Guide: Good Money Habits This Money-Giving Season

marty with money gift

I hope you had a very happy holiday celebration with your family! As the festivities dwindle down, I want to discuss with you what happens after all the gift-giving. This article is about discussing with your kids how to save money given to them. After all the physical and monetary gifts, another gift we can give is helping our kids develop good money habits, financial confidence, and responsibility.

Impart Financial Confidence By Showing Your Confidence

The best way to impart financial confidence to your child is to show them that you believe in them. When you talk to your children about money, especially their money gifts, make them realise that every decision they make is theirs.

Remember to offer your suggestions and your guidance, but do not force or push your idea in favour of theirs.

Here are some points for you to remember whenever you're talking to your child about what to do with his/her holiday money.

Don't forget to remind them about good money habits and saving

One of the things that should be constant is reminding your kids about saving their money. Talk about financial responsibility but don't be too insistent about it though. Mention it a casual manner while conversing.

Here are some tips on how to open up the conversation and subtly advocate for good money habits:

"I saw that your Aunt Berniece gave you $150 dollars for Christmas. That is so kind of her! Do you already know what you want to do with it? How much do you want to spend and how much do you want to save?

"If you don’t know what you’d like to buy just yet, why don't you put it aside for now? We can go to the bank together to open a savings account for you."

"Have you considered giving a small part of your Christmas money to charity or an animal shelter? We can have a look at them together if you want."

The goal is to inject the ideas in their head, but not order them or tell them that it's something they should be doing. Rather, you suggest to them the good practices that you think they should be doing. You then offer to go with them or help them out if they choose to take your suggestion. After all, the money was a gift to them.

Give them ownership over their money decisions

Let your kids buy their toy or chocolates or sweetie if they want to. The money was gifted to them. It's their money and they have full control over how to spend it.

Remember that you are trying to open a discussion with your kids how to save money given to them. Giving them ownership over their money decisions will allow them to make mistakes. As parents, we hate for our kids to make mistakes and suffer from the consequences of their mistakes. But we have to remember that mistakes are the best teachers.

It might hurt to see them be a bit careless or lose some money. But we have to let them stand and walk on their own two feet. When they realise that mum and dad will not pay for their mistakes; they will begin to think twice and begin to be more conscious of their spending.

Your advice is a piece of advice, not a command.

You have to remember that every time you give your children advice on what to do with their money, it is just advice. This means that they have the option of not accepting your advice and doing something else.

Let them. You have done what you could by making sure that you give them guidance towards good money habits; let them decide what to do with it.

Kids can learn and develop confidence, independence, and a good sense of responsibility. It's up to our role as parents to make sure they develop it by encouraging the right conversations and good habits towards it.

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Why Gifting Your Kids Money For The Holidays Is A Great Idea

mum giving amrty money

Happy holidays, fellow parents! This article is something that’s very relevant for the recently concluded holiday season. I'm going to be talking about gifting your children money for the holidays.

Caught in-between?

Sometimes we’re stuck between:

  • giving our kids things they’ve always wanted (like a toy, shoes, clothes, etc.)
  • giving them money so that they can have more freedom with the gift you’re giving them.

As an advocate for financial responsibility in kids, giving your kids money for Christmas is a good choice. 

I can feel that this decision might raise some eyebrows for some. But let me explain why I think money-gifting is a good idea.

Gifting the kids money allows you to engage them in money conversations.

When your kids open their presents, you can begin to talk to them about money. You can talk about saving it for the future or allocating money in different “budgets”. It is also an opportunity to give them light tips about responsible financial ownership

You can also consider gifting your child a piggy bank together with the money. That way, you can nudge them towards putting all (or a part of) the cash into the piggy bank.

Reminder: The money you are giving them are gifts, meaning there should be no strings attached.

When you are gifting your children money for the holidays, you have to remember that the money you are giving them should not be subject to too stringent  “savings conditions”. You shouldn’t tell them that they can't spend the money. The money you give them is theirs and they should have the freedom to spend or save it in any way they want to. But you should certainly engage them in a dialogue around what they want to spend on and why it would be sensible to save some.

We want to give them confidence in the choices they make involving their own money. You are using the gift as a tool for opening up responsible spending and saving habits with kids.

I don’t recommend gifting cheques or digital money to younger children. Cheques are very abstract concepts and children cannot understand deep abstract concepts yet. They are still not able to understand that a piece of paper with the amount written on it can equate to real money.

Stick to cash for younger children as it is more concrete. As I mentioned in one blog post, it is important to concretise the concept of money.

Take advantage of kids' receptiveness for tactile and kinesthetic experiences.

I recommend breaking the bigger bills into coins or smaller bills! Because this allows a more tactile experience for them. They can count smaller bills so that they can see how coins or smaller bills can make twenty, fifty, or even a hundred! This imprints to them that even the smallest amount will contribute to wealth-building.

Aside from that, don't be dismissive when they ask you follow up questions as you give them tips on saving. Children are naturally inquisitive and curious beings, so they are bound to ask. Use that to your advantage. Explain the importance of saving but also don't forget to remind them that the money is theirs.

Be responsible money gifters!

Part of responsible financial parenting is making sure that our kids do not create unrealistic expectations on receiving money. So I would like to remind you to discuss expectations with your kids.

Do not forget to explain to children the concept of gift and that the money given are gifts. You have to let them know that they should not expect to receive such amounts every Christmas or special occasion.

When you give cash gifts that children will personally be handling and counting, make sure that the amount is appropriate for their age. There's no point in handing over something like $1000 dollars to a 7-year-old. They won't be able to understand the immense value of such big money. The things they want won't reach that value anyway. You’d rather gift them a smaller amount they can manage themselves, and transfer the rest directly onto their savings account, for example.

Fellow parents, I hope you and your family have a very wonderful holiday celebration. I hope this quick article helped you decide on whether you'll be giving your child money for the holidays or not.

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Happy holidays!

Why Teaching Your Kids About Money Is Important

mum teaching marty about money

As parents, we all want the best for our kids. We want our kids to get the best upbringing, the best education, the best quality of life, and the best financial situation. An important part of raising our kids and giving them a good upbringing is making sure that they grow up to be financially responsible individuals. We are the biggest influence on our children’s development and it’s important that we set good examples and become more transparent about money with our kids. This includes teaching our kids about money.

Monkey See, Monkey Do

An annual study created by T. Rowe Price called Parents, Kids and Money Survey last 2017,  showed that parents are likely to pass down good and bad financial habits to their kids. This survey sampled 1,014 parents of 8-14-year-olds in the US, which analyzed parents’ attitudes and behaviours that were associated with kids’ financial habits. The survey found that positive money behaviours and expectations among kids are often associated with parents’ decision to let their kids decide how to save and spend their money on their own, as well as parents becoming good financial models. Negative and troubling money behaviours and habits were also frequently seen on kids who have a troubled history with money.

The good and bad habits that our kids learn and develop come from us, so we have to be more aware of how we discuss and treat money in front of our children. 

We are the key to our own kids’ financial success. It's important that we figure out how to teach our kids about money and how to slowly inculcate the money habits that will accompany them through adulthood. 

We have to be diligent when it comes to teaching our kids about money.

We have to start exposing our kids to money and let them participate in small money decisions. That way, they begin to develop a very clear and concrete view of the value of money and how it works. 

With the rise of credit card usage and the increasing number of digital and blockchain payments, the notion of currency is becoming more and more abstract. If children are not able to get a grasp of the actual exchange of money and goods, then they will develop the idea that money is endless and easy to come by.

Also, our children do not see us save when all our money interactions are digital. They do not see our salaries being wired to our accounts, and part of that being wired to our savings account. These distant digital-only transactions make it all the more important to create interactions around money at home for children to observe and copy. 

Get Started on Teaching Your Kids

Forbes.com created a simple guide on how to slowly introduce your kids to money including how to slowly introduce these concepts in everyday practice and everyday encounters.

Ages 3-5

The time you start teaching your kids about the concept of delayed gratification. You teach them that whenever they want something that they don’t have the means to purchase for, they will need to wait and save up for it.

Ages 6-10

You show kids that money is a limited resource. This is when you need them to participate in actions that will allow them to practice transacting with a limited amount of money and making purchase decisions based on the budget you set.

Ages 11-13

You can begin to teach more abstract concepts like compounding interest. At Smart Way To Start we believe that it is important to explain the notion of interest even earlier - and help children as early on as possible that money in a piggy bank can’t grow. You can only fill a piggy bank but the money inside it does not grow. For that you need a savings account, so your money can be put to work. We think it is very important that children learn this from a young age, because every year counts when you are compounding interests. The earlier you start, the more money you earn.

Introducing early the notion of interest is key, because once children understand it they can also understand why debt can be dangerous. Compound interest on money you owe can make the amount owned increase very rapidly - especially with high interest rates on consumer debt. So when you children are teenagers and might receive their first credit card, It is very important to discuss  responsible credit card ownership and finance charges. 

Ages 14 and above

At this point, your child would be reaping from the fruits of the financial teachings you’ve been imparting since age 3, and the best you can do is to continue to be open about finances and money with your child.

If you want to learn more about how to slowly introduce your kids to money, I've provided 5 easy tips on this article.

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5 Easy Tips To Teach Your Kids About Money

introduce your kids to money - mara Harvey - Smart way to start

Dear parents, are you trying to figure out how to introduce to your kids to money and its concepts but not sure how to get started?

As a parent myself, I understand that we all want the best for our children and we want them to have a bright future ahead by helping them develop the best habits -- from work ethics to time management to managing money wisely. And indeed, one of the hardest (and most important) things to teach kids is the value of money.

If you're interested to know more about why teaching your kids about money is important, read my article here.

Early bird is the way to go

Research by government-back Money Advice Service (MAS) shows that money habits are formed as early as age 7, so if you want them to have good money habits when they grow up, it’s very important that you begin to introduce the right money habits as they go through their important developmental years. The more they know about money and what it is, the easier it will be for you to teach them how to save and spend it wisely.

Oftentimes, we dismiss children the moment we approach or reach decisions involving money (like paying the bill at a restaurant or checking out groceries at a supermarket.)  The approach I’ll be sharing with you involves the opposite: introduce your kids to money as early as possible. Get them involved and aware of how money works and what it’s used for at an early age.

To introduce your kids to money, start with something as simple as talking about money to your kids. Use every opportunity you can. It doesn’t have to be something as heavy as telling them how hard it is to work for money or very abstract concepts like interest-earning or banking. It can be something as easy as asking for their help in counting the pennies to pay for small transactions or allowing them to partake in the simple practices of having them hand over the money to a vendor.

If you‘re not sure where to start, here are simple tips to get started how to introduce your kids to money: 

1. Make daily money decisions visible.

Children are very observant and they pick up a lot from just watching you do things. When you’re out buying groceries at the supermarket, use the opportunity to engage with your child as you line up items on the counter. Let them help you as each item gets scanned and let them see you take money out of your wallet. This creates concrete experiences for them around your household’s money habits.

2. Let your child participate in money moments.

This can be through simple things like letting your child hand over coins or banknotes to the waiter when you pay for a coffee or for food, and letting them receive change. 

3. Talk about money moments openly.

After having your child receive the change, you sit down, count, and check the change right beside them. That way, they know that every coin counts.

4. Make money moments engaging and fun.

Whenever possible, relate money-making decisions to goals that are motivating or interesting to your child. You can do this by letting your child actively participate in decisions concerning his/her interest. For example, if your child loves pizza, then try to bring them along when you’re buying the ingredients and let them participate in the exchange process (handing the cash, getting the change back, and counting the change.)

5. Celebrate good money habits and achieving savings goals.

Make use of a child’s tactile and kinesthetic learning for this. You can ask your child to count bills and coins as they put it on the piggy bank and then praise them for doing good work in saving money.

The tips I mentioned above make use of concretizing what money is and what it does. At such a young age, there is no point in trying to discuss the finer and abstract points of money to your child. At this point, the goal is simple and very straightforward: you need to introduce and expose money and monetary practices to your children as much as you can. That way, it becomes easier for you to discuss it with them as they grow up since the concept is not completely foreign to them.

Dear parents, if you have more tips on how to introduce money to your kids, don’t hesitate to share your tips with the community! Together, let’s help our kids grow towards a financially sustainable and secure future.

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Enjoy doing good this Christmas!

Smart_way_to_start_Xmas

Christmas is approaching fast and it is the most wonderful time of the year! Maybe your children will be lucky enough to receive a gift of money from relatives and friends. So this is a perfect opportunity to put into practice the learnings from books 2 - A SMART WAY TO SAVE - and from book 3 - A SMART WAY TO SPEND.

When the excitement of Christmas Day is over, have children appreciate the gift they have received by explaining to them the value of this gift: 

How many a hours of chores (which chores and at what price per hour? ) would they have had to do, to earn the amount gifted to them? This is a great way to practice mental math (super important skill for future financial confidence!) and engage in a values-based discussion. Appreciating that other people had to work hard for the money gifted is an important part of the learning journey. 

How much of this amount will be saved and how much will be spent to fulfill a Christmas wish? Remind your child not to take all their money with them when they go shopping, so they don’t fall into the trap of spending it all in one go! Setting some aside is a wise way to start planning. 

What will you chose to spend your money on? Have you made a list ... and checked it twice? Even Santa checks his list twice! The smarter the planning, the less likely any pennies will be wasted on something of poor quality or that will be played with once and then neglected. 

What about donating some for a good cause? This is a great opportunity to think of people less fortunate and teach children that sharing is caring. And choose wisely which organizations you donate to. A great starting point can be to introduce your child to the United Nation’s 17 Sustainable Development Goals (SDGs): pick a cause that is close to your heart! 

Does “Sustainable Development Goal” sound too complex for your young child?
No worries - we made it kiddy friendly with our “Start Doing Good” poem! It teaches children the SDGs in a simple way - and it’s as easy to memorize as the alphabet! 

Enjoy doing good this Christmas! 

My Unexpected Learnings During The Fourth Book Launch

“A Smart Way To…” is only the beginning! 

Financial responsibility and gender pay equality have always been dear to my heart and I’m glad that I’m helping parents slowly open up these conversations with their children 👨‍👩‍👧‍👦

When I realized the huge impact parental guidance has on the financial habits of children, I set out to advocate that part of any responsible parenting is also integrating positive money habits to your children 💵

I want to help parents help their children become financially savvy as they grow up.

I am very happy to learn the impact and effect of my books firsthand – mums and dads alike want to empower their kids. The little girls want to read them over and over again and are actually asking for what their pay will be of the do a specific chore like cleaning the car. It’s amazing to see girls and boys alike become smarter with their time and money.

To those who attended our fourth book release and anniversary at the Birdhaus in Zurich, thank you! It is in your presence that I saw the impact of what I’m trying to do and realised that we all have more to do if we truly want to raise a generation of sustainably-minded and financially responsible children.

I’m glad that I’m seeing this goal and advocacy become a reality through “A Smart Way To..” and all the parents and likeminded people that observed this special occasion with me.

I look forward to celebrating more milestones with you all.

-Mara